August 25, 2019 / 4:17 PM / 4 months ago

Argentina Treasury Minister defends use of central bank reserves: local media

BUENOS AIRES (Reuters) - Argentina´s newly appointed Treasury Minister Hernan Lacunza defended the use of Central Bank reserves to ward off further depreciation of the peso following presidential primaries earlier this month, according to interviews published in local media on Sunday.

FILE PHOTO: Newly appointed Argentina's Economy Minister Hernan Lacunza attends a news conference at the Casa Rosada Presidential Palace in Buenos Aires, Argentina August 20, 2019. REUTERS/Agustin Marcarian

“There´s no point in having these reserves if the dollar is flying off like a kite,” Lacunza said in an interview with local daily La Nacion. The country´s top finance official also told news website Infobae that “the reserves are there to be used.”

Lacunza, who was sworn in as Treasury Minister last Tuesday, gave several interviews to local media outlets on Friday.

His appointment followed incumbent President Mauricio Macri’s trouncing in the primary election on Aug. 11 by Peronist Alberto Fernandez, who is now the front runner for the October presidential election.

Fernandez’s landslide support in the primary vote prompted the peso currency to plummet 18% in the last two weeks amid fears of a return to the interventionist economic policies of former President Cristina Fernandez de Kirchner, who is Fernandez’s vice presidential candidate.

Argentina´s Central Bank has tapped into $7 billion worth of reserves since the primaries, according to provisional bank statistics, as the bank has paid off debt and sold dollars in an effort generate liquidity amid fears of further depreciation.

“We are not going to leave scorched earth behind for those who follow us,” Lacunza told the weekly Perfil.

Argentina´s first-round presidential election is slated for October 27, with an eventual run-off scheduled for the end of November. The president-elect would take office on December 10.

“The election is no excuse to risk stability,” Lacunza told La Nacion.

The International Monetary Fund sent a team this weekend to meet with the economic advisers to Macri and Fernandez to “exchange views.”

The center-left Fernandez has criticized the $57 billion standby agreement Macri struck with the IMF in 2018, pledging to “rework” the deal if elected, but has also promised that Argentina has “no possibility” of default if he is elected.

Reporting by Jorge Otaola, writing by Dave Sherwood; Editing by Sonya Hepinstall

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