June 29, 2018 / 5:17 PM / 5 months ago

UPDATE 5-Argentine central bank boosts dollar sales as peso hits record low

(Updates prices; adds second central bank auction, IMF details)

BUENOS AIRES, June 29 (Reuters) - Argentina’s central bank boosted its foreign currency sales on Friday after the country’s peso hit a record low amid a financial crisis marked by high inflation, sputtering economic growth and an outflow of capital.

The peso ended 2.87 percent weaker at 28.95 per U.S. dollar, after touching a record low of 29.80 earlier. The closing level brought the peso’s losses against the greenback to 13.75 percent in June and 35.58 percent in the first half of the year.

The central bank’s first sale on Friday came through a pre-announced auction of $150 million, using funds recently provided by the International Monetary Fund (IMF), at an average price of 29.06 per dollar.

The central bank later said it sold $300 million of its own reserves at 28.96 pesos per dollar.

The events in the foreign exchange market helped push the country’s Merval stock index 1.4 percent lower.

The financial volatility has led many economists to predict that Argentina will fall into recession this year. Data published on Friday by government statistics agency Indec showed industrial output fell 1.2 percent year-over-year in May, the first interannual decline since April 2017.

Argentina’s peso, like currencies in other emerging markets, has come under pressure from a flight of capital to safe havens in the wake of a string of interest rate hikes by the U.S. Federal Reserve. Argentina’s annual inflation rate is running at over 25 percent.

The currency’s fall prompted Argentina to turn to the IMF last month for a $50 billion stand-by financing deal.

The IMF disbursed the first $15 billion last week, when the central bank announced it would auction $100 million per day to support the peso. It upped that amount to $150 million on Thursday, and said it would sell the same amount on Friday as well.

That same-day increase in the amount of the daily auction ran contrary to a pledge in the letter of intent the government signed with the IMF that any increases in the amount auctioned would be announced three days in advance.

The central bank kept its policy rate at 40 percent on Tuesday in its first interest rate decision since Luis Caputo took over as central bank governor on June 14. Caputo, a former finance minister, replaced Federico Sturzenegger. (Reporting by Walter Bianchi and Jorge Otaola Writing by Hugh Bronstein and Luc Cohen Editing by Paul Simao and Leslie Adler)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below