The
currency hit a new record low Thursday of 39 pesos per U.S. dollar,
making it the world's worst-performing currency.
Argentina's
central bank yanked higher its benchmark interest rate to a dizzying
60 percent on Thursday in a bid to control rampant inflation as the
peso currency plummeted 15.6 percent to a record low 39 pesos per
U.S. dollar.
Latin
America's third biggest economy is expected to shrink this year,
weighed down by inflation running at 31 percent, while already-scare
credit gets choked off by increasingly onerous borrowing costs. The
central bank raised the rate from 45 percent.
The
central bank issued a statement saying it called a special meeting of
its monetary policy committee, which voted unanimously to hike its
key interest rate "in response to the foreign exchange rate
situation and the risk of greater inflation."
The
moves came a day after the International Monetary Fund (IMF) called
for the government to institute stronger monetary and fiscal policies
in response to the meltdown of the peso, which has lost 52.2 percent
of its value against the greenback so far this year and is the
world's worst-performing currency.
Despite
signing a US$50 billion standby financing deal with the IMF earlier
this year, President Mauricio Macri is struggling to convince the
markets that he can spur economic growth while cutting fiscal
deficits and combating inflation.
Macri's
cabinet chief, Marcos Pena, told reporters on Thursday the government
would "find ways to hasten the fiscal tightening process."
Argentina
has already agreed with the IMF to cut its fiscal deficit from 3.7
percent of gross domestic product last year to 2.7 percent in 2018
and 1.3 percent in 2019.
Government
spending reductions face opposition from Argentines reeling from cuts
in public utility subsidies, a move that has pushed home heating,
electricity and water bills higher.
Argentina's
biggest labor group, the CGT, and other unions have called for 24-
and 36-hour general strikes in late September to protest Macri's
belt-tightening measures.
The
recent slide in the peso was prompted by fears the government may
have trouble meeting its 2019 bond obligations. Argentina has US$24.9
billion in peso and foreign currency denominated debt payments next
year.
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