Argentina asked the International Monetary Fund for financing to help stem a run from the Peso to the US dollar that is sparking a surge in interest rates and threatening to derail the country's economic recovery. The sum requested is estimated between 25 and 30bn dollars, 500% Argentina's IMF quota and could be disbursed in two forms, a flexible credit line or a precautionary credit line.
Argentine stocks rose, the peso strengthened more than 3% and credit default swaps fell on Monday after the mid-term legislative primary election was seen as favoring business-friendly President Mauricio Macri's reform effort.
Argentina's Peso rose against the dollar on Monday for the first time in two weeks, after the central bank intervened in the foreign exchange markets on Friday to halt the currency's rapid decline to historic lows, when it reached 18 Pesos.
Argentina announced on Wednesday it was lifting currency controls and would allow the peso to float when markets open on Thursday, setting the stage for a devaluation, following pledges by new president Mauricio Macri for reforms to spur economic growth.
Argentina's economy minister and central bank governor came out strongly to warn the “devaluation club” and speculators in the foreign exchange market who allegedly are pushing the value of the US dollar and sinking the local Peso.
In what promises to be a week of surprises as the Argentine government unfolds measures to contain the price of the US dollar, this Monday the peso held relatively stable after last week's sharp devaluation. While the official rate remained unchanged at 8.01 Pesos for a greenback, in the parallel market it climbed to 12.15 Pesos.
The black market dollar exchange rate in Argentina pierced the milestone 8 Pesos mark while the official rate climbed to 5.09 Pesos with the gap between the two markets reaching 57%. The other ‘cash’ option: buying Argentine shares in Buenos Aires and reselling them in New York climbed 10 cents to 8.46 Pesos.