Argentine peso rallies for third straight day
The remarks gave a boost to the peso, which rose 1.87 per cent to 36.81 per dollar, and added to yesterday’s 3.09 per cent gains.
The Buenos Aries Stock Exchange’s Merval Index meanwhile was up 3.41 per cent following a 13 per cent surge over the prior two days.
Argentina’s 100-year bond, which was sold to much fanfare over a year ago, also found its footing as Mr Caputo called the recent gyrations an “exaggeration”. The $2.7bn issue was trading at 73.29 cents on the dollar on Friday. That’s up from the 72.78 cents it stood at on Thursday but remains some way off from last October when it was trading at above par.
The government is currently in talks with the International Monetary Fund to negotiate new terms for the $50bn loan program the Fund extended in June. Finance minister Nicolas Dujovne indicated yesterday that a deal could come as soon as this month.
That would provide much reprieve for the crisis-stricken country. In order to stem the peso’s rout, the central bank recently raised its benchmark interest rate 15 percentage points to 60 per cent, and pledged to maintain this level through December. The central bank appear set to ease monetary conditions after that.
At 60 per cent, according to Mr Caputo, it is a “crisis rate,” and a level that is “not viable in the medium or long term.”