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☀ Domingo Brief — Argentina Relaxes Currency Controls

Each Sunday, take two minutes to catch key stories and opportunities shaping Latin America.

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Latinometrics
April 20, 2025 • Reading Time: 3 minutes

Welcome back to the Domingo Brief! This week, we’re keeping up with the death and legacy of a Peruvian icon, Haiti’s checkered past with France, and more.

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Less than a quarter (23%) of you correctly guessed the Cisplatine War as the 19th century war in which the Empire of Brazil was not victorious. This conflict was fought from 1825 to 1828 between the Brazil and the United Provinces of the Rio de la Plata over control of Brazil’s Cisplatina province. The fighting took place following their independence from Portugal and Spain, respectively, and resulted in the independence of the Cisplatina territory as the Oriental Republic of Uruguay. The Empire of Brazil thereby lost control of its southernmost territory in what is now modern-day Uruguay.

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🇦🇷 Argentina has secured a $20B loan from the International Monetary Fund, agreeing to relax its strict currency controls and partially float the Argentine peso’s official exchange rate. Since mid-March, the central bank has spent $2.5B to prop up the exchange rate, resulting in net foreign reserves falling to some -$7B. Now, with $12B delivered upfront and $3B due over the course of the year, President Javier Milei’s government will have leeway to defend a more flexible exchange rate situated between 1K and 1.4K pesos to the dollar.

Latinometrics: Argentina’s gross reserves will be bolstered by a renewed $5B swap line with China, as well as an additional $6.1B lent by multilateral banks. The central bank only plans to sell dollars to defend the peso if it approaches the 1.4K upper band, while also offering high interest rates in pesos if local dollar demand accelerates too rapidly. The reduction of capital controls, moreover, intends to make it easier to take money out of Argentina and thereby attract foreign investment, although some controls will remain in place to minimize the risk of sudden outflows.

🇧🇷 COFCO International, China’s state-run food group, is building its biggest export port terminal in the world in the seaside city of Santos, Brazil. The building of the terminal, used for the storage and export of soybeans from Brazil to China, has led to dozens of new employees recruited by COFCO, cementing Brazil’s status as the world’s farm powerhouse. Amidst the escalating global trade war between the United States and China, this $285M investment underscores the importance of Brazil and its abundant export supply of agricultural products to both COFCO and the wider Chinese market.

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