Monthly dollar purchases increased in June, ahead of the October 26 national legislative elections in Argentina. According to a Central Bank report, one million people opted to buy United States currency last month for a total of US$2.4 billion, while US$2.2 billion had been purchased in May.

This marked a stark contrast with a low volume of dollar sales by comparison: 544,000 people sold US$396 million dollars in June. The data was released in the Argentine Central Bank’s latest Evolution of the Exchange Market and Exchange Balance Report.

In Argentina, it is common for citizens to stock up on dollars before an election, in an attempt to secure their savings and better prepare against potential devaluations of the Argentine peso, spikes in inflation and other economic turmoil that may happen depending on the results.

June was the second full month without currency restrictions, known in Argentina as the “cepo.” Lifted on April 14 following an announcement from Economy Minister Luis Caputo, those controls meant that the general population could only buy up to US$200 per month legally in banks, and even then there were several restrictions regarding who could purchase dollars.

Controls were in place for several years in Argentina; at the same time, an illegal dollar market surged, something known as “blue dollar” trading.

The purchases registered in the report are those made legally at banks. Net purchases for small clients during June reached over US$2 billion, above May’s US$1.9 billion.

Beyond currency purchases, there was also an increase in dollar demand for paying credit card expenditures, especially those related to tourism, for a total of US$863 million.

According to the report, “70% of withdrawals over ‘Travel, tickets and other credit card payments’ are directly cancelled by clients directly using funds in foreign currency, which reduces the impact of these spendings in the exchange market.”

Those funds, it added, are received by banks and then sold, “and therefore constitute funding for the exchange market.”

The current account of the exchange balance registered a surplus of US$2.1 billion in June, according to the report.

The official dollar exchange rate currently sits at AR$1,295. It saw a spike after the cepo was lifted, given it was at AR$1,097 on April 11, the last day of the controls. Although it remained mostly stable in the first month and a half after the restrictions ended, it had a new surge in late June, when it surpassed the AR$1,200 mark.

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