Despite appeals to national unity from president Cristina Fernandez, the US dollar, Argentina's best test for confidence, climbed 22 cents to a new record in the informal market at the end of Tuesday's trading: 14.20 Pesos.
Likewise the blue-chip swap rate advanced to 12.71 Pesos, while the stock exchange rate jumped to 13.63 Pesos. Meanwhile, the US dollar traded steady and closed at 8.42 Pesos in Buenos Aires city banks and foreign exchange offices.
The new record of 14.20 Pesos brings the gap between the official and informal rates to 69%.
The Central Bank’s reserves dropped by 99 million dollars to 28,596 million on Monday, in a market with short supply as grain exporters end the harvest season and sell off an average 60 million dollars daily.
The central bank started early trading by offering 40 million dollars to contain the pressure, because it had to pay for imports and an energy shipment, but this was not enough to impede a new record.
On Monday the central bank backtracked on its decision to hike interest rates two weeks ago, bringing its Lebac and Nobac notes back up by one percentage point. The rates for note-issuing with returns in 98 days and 112 days were set at 26.86% and 27.37%, respectively, the same levels as on August 5.
The Buenos Aires press also reported on the ongoing differences between Economy Minister Axel Kicillof and central bank governor, Juan Carlos Fabrega, because apparently they have differing positions on the optimal interest rates to both contain inflation while upholding consumption.
Kicillof has contended that high inflation loses relevance if paired to economic growth, while Fabrega, who arrived on the scene late last year, has lobbied for the government to pump the deflationary brakes by bringing up interest rates to the level of inflation, at the cost of restricting consumption, in turn pivotal to a higher GDP.
Top Comments
Disclaimer & comment rulesHigh inflation paired to economic growth.
Aug 27th, 2014 - 06:14 am 0Does that happen?
'...high inflation loses relevance if paired to economic growth...'
Aug 27th, 2014 - 06:34 am 0Bahahahahahahaha
Well I guess all Argentina needs is growth because it sure as hell has enough inflation.
Looking at the foto of the two, which would you rather trust with your savings ?
Aug 27th, 2014 - 07:00 am 0With your economy ?
With running your country ? ( and not into the ground, and into more debt )
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