Argentine peso starts to recover after two days of crashes
Buenos Aires (AFP)
Argentina's peso began to recover on Friday as markets opened, making a tiny 0.68 percent gain after losing 20 percent of its value against the dollar over the previous two days.
The peso was trading at almost 40 to the dollar -- a record low -- at the end of Thursday as Argentina's central bank hiked interest rates to 60 percent in a desperate bid to stabilize a currency in freefall since President Mauricio Macri requested an acceleration to IMF-agreed funding a day earlier.
Argentina's currency has lost more than 50 percent of its value against the dollar since the start of 2018 as investor confidence in the South American giant has plummeted.
A $50 billion loan was agreed with the International Monetary Fund in June with an initial $15 billion tranche of that already released.
Part of that was meant to help shore up the peso, but after Macri revealed Argentina had asked for early release of the remaining funds the peso started to plunge.
That had a positive effect on the Merval index on the Buenos Aires stock market, though, as it jumped 5.34 percent by close on Thursday on the back of strong performances in the petroleum sector, notably by Brazilian giant Petrobras with a 13.5 percent rise in share price.
Macri's request had seen the peso lose almost 7.0 percent on Wednesday and when it opened on Thursday down another 4.0 percent, the Central Bank decided to intervene, pledging to keep interest rates at 60 percent until December at least.
But that measure didn't stop the fall as the peso ended the day down 13.5 percent.
Macri's government has committed to reducing its budget deficit to 2.7 percent this year, from 3.9 percent in 2017, and to 1.3 percent of GDP next year in return for IMF support.
© 2018 AFP