Argentina: The central bank (BCRA) has increased its benchmark interest rate by five percentage points to 45%. The move by BCRA came after the value of the Argentine peso against the US dollar fell by 2.69% to Ar$29.50/US$1 on 13 August as international currency markets reacted to the sharp fall in value of the Turkish lira against the US dollar. The depreciation of the lira has led to a general flight from emerging market currencies due to concerns about contagion. A BCRA statement said that the “unscheduled” rate increase was applied “in response to the current external juncture” and to guarantee macroeconomic stability in Argentina. There was a run on the Argentine peso back in May due to concerns about BCRA’s ability to continue to prop up the currency, which led the Argentine government to turn to the International Monetary Fund (IMF) for assistance. This helped to stabilise the peso but with the latest fall it has now lost 63% of its value against the US dollar since the start of the year, which has stoked already high domestic inflation rates.
End of preview - This article contains approximately 186 words.
Subscribers: Log in now to read the full article
Not a Subscriber?
Choose from one of the following options