February 4, 2019 / 3:52 PM / 4 months ago

UPDATE 2-Argentina central bank ups dollar buying to $75 mln to rein in peso

(Adds new daily intervention limit, quote)

By Walter Bianchi

BUENOS AIRES, Feb 4 (Reuters) - Argentina’s central bank bought a total $75 million in the foreign exchange market on Monday, a spokesman for the bank told Reuters, as the monetary authority used a higher intervention limit in a bid to rein in the local peso currency.

The move comes after the bank on Friday raised the daily limit for its dollar purchases to $75 million from a previous cap of $50 million, looking to keep the peso within a non-intervention band agreed with the International Monetary Fund.

The bank on Monday bought $50 million at an average 37.3650 pesos per U.S. dollar, before returning to the market to buy another $25 million at 37.2434 pesos to the greenback.

“The announcement of the expansion of the purchase of foreign currency by the central bank was interpreted as insufficient, which is why dollar fell back again,” said Gustavo Ber, economist at the Buenos Aires consultancy Estudio Ber.

The bank has imposed a trading band on the currency as part of its $56 billion standby financing deal with the IMF. On Monday the band was 37.967 to 49.134 pesos per U.S. dollar. The monetary authority has agreed to intervene in the foreign exchange market to keep the peso within those limits.

A combination of domestic and international factors pushed the peso to strengthen past its band for the first time on Jan. 10, prompting the central bank to intervene on a regular basis over recent weeks.

It has now intervened to the tune of $685 million so far this year as it tries to keep the peso in check.

Reporting by Walter Bianchi, writing by Hugh Bronstein Editing by Chizu Nomiyama and Dan Grebler

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