In Argentina, the voltage falls after the peso crisis


The argentine peso has recovered on Tuesday, after a depreciation of 12% against the dollar in the space of two weeks, leaving hope for a lull (Photo by Eitan ABRAMOVICH. AFP)

The argentine peso has recovered on Tuesday, after a depreciation of 12% against the dollar in the space of two weeks, leaving hope for a lull, especially as investors have maintained their confidence in the bonds of the central Bank which were to expire on Tuesday.

It was a test day for the confidence of the holders of the bonds in argentine pesos, called to renew their confidence in this type of investment, attracted by the high rates offered by the central Bank. 100% of the holders of Lebac (Letters of the central bank) bought new short-term loans.

If the investors had claimed all of these short-term borrowings, is 625 billion pesos ($25 billion), the central Bank would have been in difficulties, because its reserves amount to only $ 55 billion.

The central Bank had started issuing on Monday of the new securities in pesos that will take the baton from those arriving at maturity, to not have to honor cash.

For the past month and a half, a lack of confidence in the argentinean peso in a context of high inflation, we are witnessing a race to the dollar in the financial centre of argentina.

The leader of the centre-right government, Marcos Peña, wants to reassure the markets. “The biggest difficulty we faced at the beginning of our governance (in 2015), has been re-starting the economy by avoiding a political and economic crisis. It was a more serious challenge than the current economic situation, we face a time of greatest strength”.

In order to curb the fall of the currency, the central Bank raised the main rate to 40% to support the peso, and has sold for 10 billion dollars in reserves.

At the close of the market Tuesday, the peso has appreciated by 3.61%, a dollar was exchanging against 24,63 pesos, after an opening stable.

– “Recover the peace” –

“The most important thing is to recover the peace, then we will have lower inflation,” said Monday evening the head of the government, during a meeting with foreign correspondents.

For the past 10 years, inflation is over 20% per year. President Mauricio Macri has made the reduction of inflation one of the main objectives of its mandate. For 2018, the government hoped to initially reduce annual inflation to 17% in 2017, 12% by 2018. It was 25% in 2017, and it is unlikely that it passes under the 20% mark in 2018.

If the government has not yet found the recipe to contain the rise in prices, it shows encouraging results in terms of growth, with seven consecutive quarters of growth of GDP. In 2017, the 3rd economy in Latin America increased by 2.8% and the forecast for 2018 is more than 3%.

The peso had reached on Monday at a historic low, a dollar was exchanging against 25,51 pesos.

Argentina has asked the international monetary Fund (IMF) for a loan and the institution will discuss Friday the request of argentina.

Neither the IMF, nor Buenos Aires have unveiled the requested sum, but the argentine press, evokes a loan of $ 30 billion.

The recourse to the IMF is a sensitive issue in Argentina. The majority of the Argentinians accuse the IMF of being responsible for the economic crisis of 2001, when Argentina entered into default of payment be, unable to pay its debts.

“This is another IMF today,” says the head of the government.

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