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  • ARGENTINA ECONOMY

    Argentine Central Bank takes steps to prop up currency

    18 de junio de 2018

    Buenos Aires, Jun 18 (efe-epa).- Argentina's Central Bank on Monday took steps aimed at stopping the peso's slide against the dollar.

    The plan includes increasing banks' reserve requirements by five percentage points with the aim of mopping up some 100 billion pesos ($3.56 billion) in liquidity.

    In addition, the Central Bank reduced banks' required foreign currency holdings from 10 percent to 5 percent of total assets to encourage financial institutions to sell dollars.

    Another aspect of the policy will be the sale of up to $400 million in greenbacks via auction.

    On Monday, Federico Sturzenegger's resignation as head of the Central Bank became official and he was replaced by erstwhile Finance Minister Luis Caputo after a weekend in which President Mauricio Macri made other changes to his economic team.

    The personnel moves and policy adjustments are happening amid a currency crisis that has seen the peso fall sharply against the US dollar in the past two months, prompting the International Monetary Fund (IMF) to recently grant Argentina a $50 billion stand-by credit line.

    The first $15 billion tranche will be available on Wednesday and the Central Bank is trying to slow down the peso's fall in the meantime.

    On Monday, the peso's exchange rate climbed 2.43 percent against the dollar, giving a slight break to the markets.