The dollar's rise intensified from the start of the last session of the month and the retail exchange rate jumped $55 at banks, closing at around $1,380, at the top of the floating band imposed by the Government after the lifting of the currency controls.

It was a"spicy" session, and the dollar was in high demand from the start of trading. Traders expected the pressure felt in previous sessions to intensify this Thursday, given the close of the month and a date with large peso maturities that could push the exchange rate even higher.

The wholesale dollar reached new all-time highs on the MULC. The wholesale exchange rate closed at $1.373, $58 higher than its Wednesday close, when it had already soared. The official dollar's jump also overheated the dollar on the street, with the blue dollar trading at $1.335. At the same time, financial quotes also jumped: the MEP dollar climbed 2.5%, and the CCL, which is used by large companies, rose 2.8%.

On Wednesday, the wholesale price had already been breached at $1,300, despite the Central Bank's attempts to contain the price through rate hikes and futures trading. Market operators indicated that the Central Bank was once again participating in the REPO trading session, exclusively for banks, with an annual rate of 40% for overnight placements. The day before, it had offered an annual rate of 35%.

This Thursday, the $2.8 trillion maturity corresponding to Tuesday's Treasury tender was settled. As members of the economic team noted, part of the excess pesos will be absorbed through reserve requirements, following the recent changes in the regulation of money-market funds, which will go into effect this Friday.

"This liquidity injection coincides with renewed pressure on the exchange rate," Max Capital noted."As previously noted, the government appears focused on containing exchange rate volatility and is willing to defend the exchange rate level through interest rate policy. These recent actions reinforce the idea that the BCRA is actively trying to establish a floor on the short end of the curve to shore up the exchange rate structure," they added.

Foreign exchange trader Gustavo Quintana noted that this Thursday, the volume traded in the spot market was US$598.9 million and in futures, US$2.456 billion."Record volume was recorded in the futures market in July, highlighting strong official intervention."

In this regard, Pedro Sciaba Serrate of PPI commented:"The dynamic behind the movements of these two days was the rolling of Rofex contracts. With the July expiration, banks had to roll over the August contract (up almost 5%), which also caused the increase in the spot exchange rate. If this were the case, we should see some calm during the first few days of August."

For now, beyond these indirect interventions in the foreign exchange market to try to contain the price, the Central Bank has not intervened directly."The spot price is 9.2% below the upper band of $1,449 and 36.1% above the floor of the floating band of $966," PPI noted.

The question in the City is how the story will continue in the first round of trading in August this Friday. Pablo Repetto of Aurum Valores emphasized:"The dollar overshot this Thursday; I think the rise was too high. However, it seems to me that the government may feel more comfortable with an exchange rate in the $1,320/$1,350 range, but with rates in the range of 30% annually, than with what we saw weeks ago: a dollar tied to $1,260, but with exorbitant rates close to 60%."

The effect of the reduction in withholdings announced over the weekend could boost the exchange rate if agricultural sales increase from the beginning of August. At the same time, Repetto noted that the price's proximity to the upper limit of the band proposed by the government itself could serve as"exchange insurance" for those investors who are willing to engage in carry trades.

"The market is eyeing the ceiling of that band, and I don't think it would be surprising if it began testing it. Once it reaches the ceiling, the Central Bank could intervene, use the money in the fund, and so discipline the market a bit," said Martin Polo of Cohen.