Argentina Launches $2B Repo to Boost Reserves Amid IMF Review

Argentina's central bank unveiled a fresh set of economic measures on Monday aimed at bolstering foreign reserves ahead of a key review with the International Monetary Fund (IMF). Among the steps is a new repurchase agreement (repo) operation of up to $2 billion, following a similar $1 billion transaction last December.

The initiative is part of President Javier Milei’s broader "Phase 3" economic reform agenda, which includes liberalizing monetary policy, floating the peso, and restructuring the central bank’s balance sheet. These reforms align with the IMF’s conditions under a recently agreed $20 billion loan program. Argentina has committed to raising its net foreign exchange reserves by $4.4 billion without buying dollars locally.

A dollar repo auction with international banks is scheduled for June 11, designed to reinforce Argentina’s fragile reserves, which were in the red as of December. The central bank also issued a $1 billion bond recently to further shore up its reserves.

In a significant policy shift, the central bank announced it will no longer set a benchmark interest rate—previously fixed at 29%—but will allow the market to determine rates. This marks a move away from inflation-targeting strategies toward a framework based on controlling monetary aggregates.

"The reorganization eliminates the notion of a fixed monetary policy interest rate," the central bank stated, emphasizing that interest rates will now be driven by market forces.

In April, Argentina scrapped its crawling peg currency regime and allowed the peso to float between 1,000 and 1,400 per dollar. It also removed capital controls that had limited dollar access, signaling a bold shift toward greater economic openness and market-driven policies.