MercoPress. South Atlantic News Agency

Argentine Peso slips on Tuesday; central bank sells debt notes at a rate of 71.39%

The central bank sold 110.929bn pesos (about US$ 3 billion) worth of the seven-day notes on Tuesday with an average annual interest rate of 71.392%, traders said

Argentina’s peso slipped on Tuesday, a day after the central bank’s new governor reassured the public that its approach to taming the country’s rocky economy would be sustainable over the medium term. The peso closed 0.46% weaker at 36.65 per U.S. dollar. The currency has fallen 0.30% against the dollar this week, although it has climbed 12.63% since the beginning of the month.

Tuesday’s move lower came after Argentina’s central bank governor Guido Sandleris, who was appointed last month, re-hashed the bank’s monetary policy. Sandleris spoke with measured optimism about the bank’s strategy of keeping pesos out of the foreign exchange market by offering daily auctions of high-interest peso-denominated debt, known as “Leliq,” to banks.

The central bank sold 110.929 billion pesos (about US$ 3 billion) worth of the seven-day notes on Tuesday with an average annual interest rate of 71.392%, traders said.

Sandleris, has made control of the money supply the bank’s major priority in an effort to rein in inflation, which is expected to top 44% by year-end, according to the latest central bank poll. Banks have benefited from the high-interest Leliq interest rates, Sandleris said.

“That was one of our objectives; that saving in pesos would again be attractive and would take some pressure off the exchange market,” he said.

“The challenges imposed by harsh monetary and fiscal policies, added to Argentina’s increasing political and social noise are not contributing to a scenario of greater confidence”, Gustavo Ber, an economist with local consultancy Studio Ber said. “Especially in the run-up to next year’s presidential elections.”