Hoarding Reserves Comes at a Cost

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Hoarding Reserves Comes at a Cost

First week
October 2022

After having managed to nearly 5 billion dollars in the foreign exchange market in September, the government launched a plan to take care of its new reserves. Logically, no one can disagree with the idea of strengthening the Central Bank’s balance. In fact, that is the biggest short-term problem the Argentine economy faces. The problem is how it plans to hoard reserves and at what cost for the rest of the economy. Issues like these must be analysed in general equilibrium, otherwise, solving one problem creates another.