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LatinNews Regional Monitor: Brazil & Southern Cone - 30 August 2018

In brief: Uruguay

Uruguay: Uruguay’s central bank (BCU) has intervened in the local currency market for the first time since June to stem the appreciation of the US dollar against the Uruguayan peso. The BCU said that its decision to sell US$62m in the local spot currency market was a response to the volatility observed in regional markets following the Argentine government’s announcement that it would seek an advance of the US$50bn credit line that it has agreed with the International Monetary Fund (IMF) to try to dispel local market concerns about the persistent devaluation of the Argentine peso against the US dollar. The US dollar has been appreciating against emerging market currencies since the start of the year and has gained 11.25% on the Uruguayan peso since January. But following the announcement by the Argentine government, there was a marked increase in demand for dollars in Argentina and Uruguay amid fears that Argentina could be facing another major economic crisis. The BCU’s intervention helped to stem the dollar’s appreciation although it traded at Ur$32/US$1 yesterday, the highest exchange rate since March 2016.

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