The dollar has strengthened against the peso in recent weeks. (Credit Noticias Argentinas / Juan Vargas)

The Argentine peso has hit a record nominal low against the US dollar, a day after the Central Bank sold a historic amount of international reserves.

At the end of trading today the average exchange rate for consumers was 20.84 pesos per US dollar, losing 1.36 percent compared to yesterday when greenbacks were worth 20.56 pesos. The previous record for the peso against the dollar was reached on March 7, when a dollar was worth 20.69 pesos. Since then the Central Bank’s (BCRA) international reserves have fallen by more than US$ 3 billion.

Although not as dramatic as yesterday, the Central Bank once again sold US$ 853 million dollars on the foreign exchange market today in a bid to contain the peso.

The Central Bank sold a record amount of international reserves yesterday to prevent a steep depreciation of the peso, taking the amount of international reserves below US$ 60 billion.

Facing pressure on the peso, the Central Bank sold US$1.471 billion dollars yesterday on the foreign exchange market, making it the single-biggest one day intervention by the monetary authority in Argentina’s history. In the first three days of the week more than US$ 2 billion was sold.

Yesterday the peso lost ground slightly to the dollar, closing at 20.55 pesos to the dollar.

Analysts have pointed out that the BCRA may have been acting to keep the exchange rate relatively stable out of concern for the possible impact on the inflation rate, which continues to be higher than the government would like. From December 2017 to February of this year the peso lost about 18 percent of its value against the US dollar, sparking concerns about consumer inflation.

Demand for greenbacks is higher for two primary reasons, according to analysts cited by La Nación. First, an increase in interest rates in the US that triggered a strengthening of the dollar against multiple currencies and the start date for a tax on financial earning for non-residents. Faced with the prospect of paying taxes, many investors sold their positions in pesos and sought dollars.

Today Cabinet Chief Marcos Peña played down the prospects of a crisis, saying that “yesterday there were circumstances that came together but we have a robust Central Bank, with reserves and a very good team. And what is most important is to reassure Argentines and that there is no reason to believe that this is a crisis nor anything like that.”

The Central Bank has been battling inflation and recently Central Bank Governor Federico Sturzenegger vowed to increase interest rates if necessary to ensure that this year’s annual inflation target of 15 percent is reached.