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Argentina sold US$ 302 million to support the Peso, exceeding an IMF agreement

Wednesday, August 28th 2019 - 09:49 UTC
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Argentina's agreement with the IMF limits the central bank to US$ 250 million in reserve sales daily, set when the exchange rate was above 51.5 pesos per dollar Argentina's agreement with the IMF limits the central bank to US$ 250 million in reserve sales daily, set when the exchange rate was above 51.5 pesos per dollar

Argentina's central bank on Tuesday exceeded for the first time a guideline on reserve sales agreed as part of its US$ 57 billion standby agreement with the International Monetary Fund, selling US$ 302 million in the foreign exchange market, traders said.

Argentina's agreement with the IMF limits the central bank to US$ 250 million in reserve sales daily, set when the exchange rate was above 51.5 pesos per dollar, with the option to intervene further to “counteract episodes of excessive volatility.”

The peso closed 1.76% weaker at 56.3 per dollar on Tuesday, traders said.

Argentina's central bank has sold more than US$ 1 billion in its own reserves to support the currency against political uncertainty touched off by the opposition's resounding victory in a primary vote this month for October's presidency election.

Other emerging markets currencies fell against the dollar on Tuesday, as concern over the escalation of the Sino-U.S. trade war drove traders away from riskier assets. The Colombian peso fell over 1% and Mexico’s peso dropped 0.6%, while the Brazilian real was the only regional currency marginally up against the greenback.

Argentina's peso lost 18% of its value in a week after leftist opposition presidential candidate Alberto Fernandez recorded a 15-point victory in the Aug. 11 primary election, as investors reassessed the prospects of business friendly President Mauricio Macri retaining power.

Fernandez has pledged to “rework” Argentina's agreement with the IMF if elected, but has so far declined to share details of a plan.

After meeting on Monday with IMF officials, who are visiting Argentina ahead of the next review of its lending program, Fernandez's coalition issued a strident statement blaming the Fund and Macri's government for the crisis.

The IMF officials, who arrived in Argentina on Saturday, previously met with Treasury Minister Hernan Lacunza, central bank president Guido Sandleris and Alberto Fernandez. After the

Fund's meeting with Fernandez on Monday, his “Frente de Todos” coalition released a statement blasting the agreement.

“Those who have generated this crisis, the government and the IMF, have the responsibility of putting an end to and reversing it,” the statement said.

A statement from the IMF on Monday night confirmed the meeting with Fernandez and his team and said it was “a productive exchange of opinions.”

Categories: Economy, Argentina.

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