LatinNews Daily - 15 August 2023

In brief: Argentina devalues peso, raises interest rate

*Argentina’s central bank (BCRA) has devalued the peso by 21.6% to Ar$350 per US dollar and raised the benchmark interest rate to 118% up from 97% in a bid to calm the markets. This follows the shock performance in Argentina’s 13 August presidential primaries by far-right political outsider Javier Milei who has promised extreme measures ahead of the 22 October presidential elections, which include dollarising the economy and shuttering the central bank. Following the BCRA’s announcement of the measures, Julie Kozack, communications director at the International Monetary Fund (IMF), issued a statement saying, “we welcome the authorities’ recent policy actions and commitment going forward to safeguard stability, rebuild reserves and enhance fiscal order.” The statement adds that on 28 July, the Argentine authorities and IMF staff reached a staff-level agreement on the combined fifth and sixth reviews under Argentina’s 30-month Extended Fund Facility (EFF) arrangement. This agreement is subject to the approval by the IMF executive board, which is expected to meet on 23 August to unlock the agreed disbursements.

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