(Bloomberg) -- Argentina’s central bank limited the amount of foreign currency the nation’s commercial lenders can hold, in a push to discourage US dollar hoarding ahead of an expected devaluation by President-elect Javier Milei after his Sunday inauguration.

The country’s central bank said that holdings may not be greater than the lowest amount recorded between Oct. 12 and Dec. 6, according to a rule published on its website Thursday. The measure — announced on the last business day of the current administration — goes into effect immediately and is valid until the end of the year. 

The new rule would force banks to unwind dollars they currently hold in their portfolio, according to people familiar with the matter, who asked not to be named discussing private information. That would increase the supply in the official exchange market and help the central bank to support the peso just as traders brace for a devaluation. Market pricing points to a 27% drop in the peso on Monday, and investors see a 44% devaluation going forward under Milei. 

Read more: Traders Bet Argentina’s Milei to Debut With 44% Devaluation 

Spokespeople for the Central Bank said the measure is aimed at keeping banks from increasing dollar holdings today. Milei’s team declined to comment.

While the incoming president’s team has signaled it won’t lift currency controls right away and seemingly delayed plans to scrap the peso altogether, the current level of the Argentine currency is largely seen as unsustainable. 

The government devalued the peso slightly on Thursday, sending it to 385 per dollar. That’s the biggest move since Aug. 14, when it devalued the currency following the primary vote — the first bellwether for the presidential election. 

Rollover failure

Banks, meanwhile, continue to shore up liquidity, ditching short-term notes known as Leliqs for one-day repos. They rolled over just 1.5% of the 1.15 trillion pesos in Leliqs auctioned on Thursday, according to people familiar with the matter, who asked not to be named because the information isn’t public. That’s the lowest amount on record for the second auction in a row, and compares with a rate of above 100% before the Nov. 19 election.

While markets welcomed Milei’s election and concerns about a surge in withdrawals amid his pledge to dollarize didn’t materialize, the growing pullback has been stirring tension in local markets. If banks continue to flee Leliqs, which have 28-day maturities and are used by the central bank to absorb pesos, the move could unleash more pesos into the economy and boost inflation that’s already at 143% a year. 

--With assistance from Manuela Tobias and Kevin Simauchi.

(Updates with peso move, Leliq auction starting in sixth paragraph)

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