Argentina currency plunges after central bank hikes rates to 60%

Pedestrians
walk past an electronic board showing currency exchange rates in
Buenos Aires’ financial district, Argentina, June 29, 2018.
REUTERS/Agustin Marcarian

Pedestrians
walk past an electronic board showing currency exchange rates in
Buenos Aires’ financial district, Argentina, June 29, 2018.
REUTERS/Agustin Marcarian

• The Central Bank of Argentina raised its benchmark
  interest rate to 60%.
• On Wednesday, Argentine President Mauricio Macri said
  he has asked the International Monetary Fund to speed up
  bailout payments to the country.
• 
  Watch the Argentine peso in real
  time here.
  

Argentina’s central bank hiked rates by 15 percentage points to
60% on Thursday after the peso continued to slide despite the
country already having the highest borrowing rates in the
world. 

The Central Bank of Argentina raised its benchmark interest rate
up from 45% after the peso
slid more than 8% to fresh lows. It is the worst-performing
emerging market currency of 2018.

The rate hike comes as the International Monetary Fund, which has
extended Argentina the largest credit line in its history,
considers speeding up bailout payments to the country. Argentine
President Mauricio Macri said on Wednesday
he had requested IMF do so in order to “eliminate any
uncertainty that was created before the worsening of the
international outlook.” 

As part of the three-year standby agreement, the government has
received $15 billion so far and was poised to get an additional
$3 billion next month.

Citing a ballooning debt burden and a weakening peso, the rating
agency Moody’s on Tuesday cut its growth forecast for Argentina.
It estimates gross domestic product will contract by 1% next
year, compared with previous expectations for a 3%
expansion. 

MI