Argentina government tells banks no FX jump ahead despite peso pressure
By Walter Bianchi
BUENOS AIRES, July 1 (Reuters) -Argentina's central bank and economy ministry met with the country's banks on Monday, quashing talk of a currency devaluation ahead despite rising pressure on the peso in popular parallel markets, a bank source told Reuters.
The Monday morning meeting included some 80 executives and representatives from various banks, the source said. It came after the government of libertarian President Javier Milei won backing for its first major reform bill last week.
The government has pledged to move into "phase two" of its plan to stabilize the crisis-hit economy, with inflation in triple digits, a deepening recession, and myriad capital controls that skew trade but are in place to shield the peso.
The bank source, who asked not to be identified, said that Economy Minister Luis Caputo and central bank chief Santiago Bausili had "ratified the exchange policy" in the meeting, including the current 2% per month crawling peg for the peso that slows its depreciation.
A sharp recent weakening of the peso in parallel markets that are widely used due to strict limits accessing dollars via the official market has created a wide gap between the official and parallel rates and stirred speculation of a devaluation.
"There's not going to be any kind of sudden jump in the exchange rate," the source said, referring to what the official toldthe banks in the meeting. He added that capital controls would be lifted but "without any rush".
The government said last week that it would look to "turn off the taps" on the central bank's issuance of pesos to pay down interest on certain debts, part of its focus on taming inflation and hitting a zero fiscal deficit.
Argentina: peso gap https://tmsnrt.rs/445ejsw
Argentina: peso gap (Interactive) https://tmsnrt.rs/41Vsf6k
Reporting by Walter Bianchi and Adam Jourdan; Editing by Sandra Maler
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
