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Argentina has decided to sell dollars to curb the devaluation of the peso



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Central Bank of Argentina I decided to intervene directly on Monday in the foreign exchange market to defend weight and contain exchange perspectives with the support of the IMF of up to six months of the presidential election in October.

Now the bank can sell up to 250 million dollars a day to meet the needs of the market, even if the exchange rate is actually below the 51.54 pesos to the dollar, that the roof of the group, whose gender non-interference is 39.75 and it was agreed to International Monetary Fund (IMF).

After a volatile week in which the peso lost 8.16% against the US dollar, on the & # 39 ads received direct support in the past, the IMF gave Argentina a credit line in the amount of 56,000 million conditional on the correctness of their dollar policy. "We support these measures, which are appropriately calibrated to the problems faced by Argentina," the IMF said.

This measure was well received in the foreign exchange market opened with growth of the peso to 46.50 and closed at 45.60 pesos from 46.80 pesos at the close on Friday. Keep the volatility of the central bank took the interest rate to 72% last week. International reserves ended Friday at 71.898 million dollars.

This is the second unorthodox measures taken in recent weeks, the president Mauricio Macri, who is already on the & # 39; revealed to freeze the prices of goods and tariffs for public utilities in an attempt to ease inflation.

"Given the increased volatility of the exchange rate (…) The Central Bank should increase bias constrains monetary policy more aggressively intervening in the currency market in order to reduce the amount of pesos," the bank said.

"Anchoring expectations"

Matthias Carugati economist told AFP, that "a state of emergency with the & # 39 is a good measure that can work, and I say" may "because there is undoubted."

In your opinion of the Central Bank "will allow the exchange rate to move more freely as possible, but when you try to reduce the volatility."

"Analysts understand that the exchange rate has a tendency to grow, to accompany inflation, the problem is when the increase is given race. This measure is aimed at anchoring expectations, "he said.

Under the new agreement, when the exchange rate above 51.44 pesos, "the central bank has increased from $ 150 to $ 250 million for & # 39; daily sales volume provided so far," the agency said.

However, these measures may also be made, if the stock price falls in the foreign currency band under certain circumstances.

"Argentina is going through a difficult situation in the financial markets," said First Deputy Managing Director of the IMF David Lipton in a statement.

In a statement, a senior official also noted that "the leaders expressed their support for the framework underlying the stand-by and implementing the policy of the government."

Inflation votes against

government Mauricio Macri He believes that the peso depreciation with & # 39; is the main inflationary factor.

Argentina in March recorded inflation of 4.7% and 11.8% accumulated in the first quarter. The annual rate was 54.7%.
The economic crisis and the rise in prices to the & # 39 is one of the main problems of the Argentines, who go to the polls in October to elect a president.

Although not yet formalized applications, Macro lost favored in the polls, and its predecessor is Cristina Kirchner, a center-Peronism.

"The weak economy can further affect the approval ratings of President Macro and increase the chances of its predecessor, the populist Cristina Fernandez de Kirchner," said Capital Economics.

Emphasizing the character of the "anti" the IMF de Kirchner, Capital Economics is considered his breakthrough in the voting intentions of even greater impact on the economy, the risk of further weakening.

Many trade unions have called for a strike Tuesday to mobilize the Plaza de Mayo, rejecting the government's economic policies Macro.

AFP

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