One step away from a record: the dollar reached $1,370 and the Central Bank tightens reserve requirements

Ahead of a key $13.8 trillion debt auction, the Central Bank (BCRA) ordered a new increase in bank reserve requirements in an effort to prevent excess liquidity from remaining in the market, which could put pressure on the dollar .

The measure establishes that reserve requirements will increase by 2 percentage points starting today and by 3.5 points starting September 1. Furthermore, financial institutions will be allowed to integrate these amounts into the same securities that will be tendered tomorrow.

Of the $13.8 trillion at stake, approximately $4.8 trillion is already in the hands of the Central Bank of Argentina (BCRA), which reduces the rollover requirement. However, the government fears that banks will resist issuing new securities and prefer to hold onto liquid pesos to manage their treasury.

Given this scenario, both Economy Minister Luis Caputo and Central Bank President Santiago Bausili are urging financial institutions to channel their funds toward longer-term instruments rather than short-maturity investments, as was the case with the now-defunct LEFIs .

Official concern is focused on ensuring that "no pesos remain on the streets" that could be dumped into the foreign exchange market. Tensions intensified after the dollar at Banco Nación rose to $1.370 at the start of the week, just $10 below its all-time high .

With this strategy, the government seeks to ensure debt rollover and, at the same time, contain the growing expectations of devaluation as the next maturities approach.