Argentine peso takes fresh hit amid uncertainty
BUENOS AIRES: Argentina’s peso plummeted to a new low despite government attempts to curb losses in recent weeks by hiking interest rates and shedding billions in foreign reserves.
Signs that further measures are needed from President Mauricio Macri’s center-right government came as the peso fell sharply on opening Monday and closed down 6.23 per cent, trading at 25.52 against the dollar.
The new losses come at an ominous moment.
On Tuesday, holders of Lebac peso-denominated bonds issued by Argentina’s Central Bank are allowed to demand settlement – sparking a potential US$25 billion payout.
At this rate, an informal International Monetary Fund board meeting scheduled for Friday to discuss a financial aid package can’t come soon enough, after Macri last week began negotiations for a loan to stem the currency run.
An IMF spokesman announced the meeting on Monday even as the peso tumbled.
“This will be an informal meeting as part of our usual process of briefing the Board on negotiations for high access IMF programs,” Gerry Rice said in a statement.
It means a decision on Buenos Aires’ request is unlikely to be made this week. The amount and terms of the loan will still have to be discussed.
Argentina is seeking a high access “stand by” financing arrangement that would provide funds above the normal loan amount, but officials have not said how much they are requesting.
Argentine media reports say the government needs at least US$ 30 billion from the IMF, with extra support from the World Bank and the InterAmerican Development Bank. — AFP