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Argentina to Sell Dollars on Parallel Market as Part of Anti-inflation Drive

Argentina's President Javier Milei attends an event commemorating the 208th anniversary of the country's independence from Spain in 1816, in Buenos Aires, Argentina July 9, 2024. REUTERS/Matias Baglietto
Argentina's President Javier Milei attends an event commemorating the 208th anniversary of the country's independence from Spain in 1816, in Buenos Aires, Argentina July 9, 2024. REUTERS/Matias Baglietto
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Argentina to Sell Dollars on Parallel Market as Part of Anti-inflation Drive

Argentina's President Javier Milei attends an event commemorating the 208th anniversary of the country's independence from Spain in 1816, in Buenos Aires, Argentina July 9, 2024. REUTERS/Matias Baglietto
Argentina's President Javier Milei attends an event commemorating the 208th anniversary of the country's independence from Spain in 1816, in Buenos Aires, Argentina July 9, 2024. REUTERS/Matias Baglietto

Argentina's central bank will start selling US dollars in the country's parallel foreign exchange markets in an effort to combat inflation and freeze the country's money supply, the government said.
Economy Minister Luis Caputo announced the new strategy on messaging platform X on Saturday, saying it would "contribute to deepening the disinflation process."
Starting Monday, when Argentina's central bank issues pesos to buy US dollars on the formal exchange market, the bank will effectively balance Argentina's monetary base by selling an equivalent amount of dollars on the parallel "CCL" exchange market, Reuters quoted Caputo as saying.
"There are no more pesos printed in Argentina by any means. It is a historic novelty," Caputo later said in a radio interview. "We were beating inflation by (a few) points and this is the 'knock out' blow," the minister added.
The announcement comes after official data published on Friday showed a five-month streak of slowing inflation ended in June when monthly inflation came in higher than in May.
The strategy outlined by the government of President Javier Milei aims to stabilize the money supply, bring down inflation and help close the widening gap between Argentina's official and parallel exchange rates traded in financial markets.
The South American country's peso has been sliding since the beginning of the year in parallel markets, which for years has diverged sharply from the official rate due to strict currency controls.
At Friday's close, the official exchange rate traded at 919.5 pesos per dollar, while the so-called "CCL" rate traded at 1,416.2 pesos per dollar. Meanwhile, the widely-used black market "blue" rate weakened to a historic low of 1,500 pesos per dollar on Friday.
Milei celebrated Saturday's announcement from the sidelines of the Sun Valley Conference, investment bank Allen & Co's annual invitation-only gathering in Sun Valley, Idaho, where the president and Caputo are courting investors.
"The monetary base in Argentina is no longer increasing, and this is tremendously powerful news," Milei said during a phone interview with Argentine news channel LN+, adding that the plan would "accelerate the deflation process in the economy."
Since Milei took power late last year, inflation has slowed dramatically in Argentina, decelerating from 25.5% in December to 4.2% in May. June's figure was 4.6%.

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BP Nears Deals for Oil Fields, Curbs on Gas Flaring in Iraq

British Prime Minster Keir Starmer (L) welcomes Prime Minister of Iraq Mohammed Shia al-Sudani to 10 Downing Street in London, Britain, 14 January 2025. (EPA)
British Prime Minster Keir Starmer (L) welcomes Prime Minister of Iraq Mohammed Shia al-Sudani to 10 Downing Street in London, Britain, 14 January 2025. (EPA)
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BP Nears Deals for Oil Fields, Curbs on Gas Flaring in Iraq

British Prime Minster Keir Starmer (L) welcomes Prime Minister of Iraq Mohammed Shia al-Sudani to 10 Downing Street in London, Britain, 14 January 2025. (EPA)
British Prime Minster Keir Starmer (L) welcomes Prime Minister of Iraq Mohammed Shia al-Sudani to 10 Downing Street in London, Britain, 14 January 2025. (EPA)

Iraq and British oil giant BP are set to finalize a deal by early February to develop four oil fields in Kirkuk and curb gas flaring, Iraqi authorities announced Wednesday.

The mega-project in northern Iraq will include plans to recover flared gas to boost the country's electricity production, they said.

Gas flaring refers to the polluting practice of burning off excess gas during oil drilling. It is cheaper than capturing the associated gas.

The Iraqi government and BP signed a new memorandum of understanding in London late Tuesday, as Prime Minister Mohammed Shia al-Sudani and other senior ministers visit Britain to seal various trade and investment deals.

"The objective is to enhance production and achieve optimal targeted rates of oil and gas output," Sudani's office said in a statement.

Iraq's Oil Minister Hayan Abdel Ghani told AFP after the new accord was signed that the project would increase the four oil fields' production to up to 500,000 barrels per day from about 350,000 bpd.

"The agreement commits both parties to sign a contract in the first week of February," he said.

Ghani noted the project will also target gas flaring.

Iraq has the third highest global rate of gas flaring, after Russia and Iran, having flared about 18 billion cubic meters of gas in 2023, according to the World Bank.

The Iraqi government has made eliminating the practice one of its priorities, with plans to curb 80 percent of flared gas by 2026 and to eliminate releases by 2028.

"It's not just a question of investing and increasing oil production... but also gas exploitation. We can no longer tolerate gas flaring, whatever the quantity," Ghani added.

"We need this gas, which Iraq currently imports from neighboring Iran. The government is making serious efforts to put an end to these imports."

Iraq is ultra-dependent on Iranian gas, which covers almost a third of Iraq's energy needs.

However, Teheran regularly cuts off its supply, exacerbating the power shortages that punctuate the daily lives of 45 million Iraqis.

BP is one of the biggest foreign players in Iraq's oil sector, with a history of producing oil in the country dating back to the 1920s when it was still under British mandate.

According to the World Bank, Iraq has 145 billion barrels of proven oil reserves -- among the largest in the world -- amounting to 96 years' worth of production at the current rate.