Santiago BausiliPresident of Central Bank (BCRA)explained how the new regime would work Floating bands of the dollar rate. The company previously announced changes to the rule that will come into effect on January 1, 2026. During a press conference, Bausili explained in detail how this happens Currency limits.
The official stated that the adjustment will be directly linked to the domestic inflation dynamics: “With regard to the floating regime between the bands, from January 1, 2026, the upper and lower limits of the band will change every month at the rate corresponding to this Latest monthly inflation data from Index. “It will be known two months in advance.”
The head of the BCRA clarified that the sliding rate of the bands does not adjust for US inflation and noted that the band’s ceiling increases by real terms over time.
The central objective of this mechanism is that the floating exchange rate bands continue to fulfill the function of limiting the exchange rate Danger of extreme movements in the exchange rate. The official summarized: “Because the sliding rate of the bands is not adjusted for inflation in the United States, the band upper limit increases in real terms over time. “The flexible exchange rate bands will continue to serve the function of limiting the risk of extreme exchange rate fluctuations.”
Along with the definition of the floating regime, Bausili expected the implementation of one Reserve building programwhich also begins on January 1, 2026 and will have “two considerations” as landmarks.
The first point focuses on “Firstly, the Demand for money“, Bausili presented, explaining that the designed program is in line with BCRA’s estimate for the growth and remonetization of the economy over the next year.
Bausili elaborated: “The designed program is in line with the BCRA estimate for the growth and remonetization of the economy in 2026. The base remonetization scenario envisages an increase in the monetary base from 4.2% to 4.8% of GDP by December 2026. This could be provided through the purchase of.” 10 billion US dollarsan amount that depends on the balance of payments supply. “An additional 1% of GDP increase in money demand could boost purchases to $17 billion without creating inflationary pressures,” he summarized.
The central bank will a Bias of its monetary policy this avoids ongoing sterilization efforts. This happens as long as the demand for money develops as expected. Bausili clarified: “In the event that the development is lower than expected, the measures will be taken.” Corrective actions that you consider relevant in accordance with the program“.
Secondly, Bausili set as a guideline “Liquidity of the foreign exchange market”to promote the continuity of the market’s proper functioning, the official said.
“The purchase of reserves will be consistent with the daily liquidity of the foreign exchange market. The daily execution amount is initially adjusted to a share of 5% of the daily foreign exchange market volume.
The president of the BCRA claimed this operational flexibility reacts to the observation that the daily traded volume is present significant fluctuations.
“The central bank may make additional block purchases. These purchases are made to prevent the operations from affecting the orderly functioning and stability of the market,” the official concluded.
In this sense, he defined the package of measures as: “monetary calibration” This is done on the basis of “the evolution of inflation, its relationship with the level of activity and the financial conditions that determine the demand for money.”
To manage aspects such as the amount of money derived from the purchase of reserves, the BCRA will continue to rely on it “Conventional and regulatory instruments”.
The Company will prioritize correcting any deviations through open market operations. These operations include purchases and sales of LECAPs to pesos. They also include transactions with a repurchase obligation LECAPs with financial institutions.
Bausili concluded that, if necessary and in a complementary manner, “the reserves can be recalibrated for the same purposes.” “The BCRA ensures that the Changes in the level of integration converge with regulatory parameters“, he explained.
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