Argentina hikes interest rate to 60% as its currency plunges

[sandensea]

Last edited Mon Sep 3, 2018, 06:48 PM - Edit history (1)

Amid the most serious financial crisis since the 2001 collapse, Argentina's Central Bank raised its key interest rate by 15 points today to 60% - the highest among all emerging economies.

The move came as the dollar rose 15.6% in Buenos Aires trading, following a 7.3% rise yesterday; it had reached 41 pesos earlier today before closing at 39.87.

The discount rate, which had been 27% as recently as April, has risen steadily as Argentine officials seek to stop the collapse of the peso: it's lost 53% of its value so far this year.

Some $25 billion has left the country since January, and a recession that began in April has left GDP down 6.7% just as of June.

The gradual peso erosion accelerated yesterday after President Mauricio Macri announced that he had requested an $18 billion advance from the $50 billion, 3-year credit line agreed to with the IMF on June 8.

Macri had already borrowed $15 billion from the credit line on June 22.

This was followed by an statement today by Chief of Staff Marcos Peña ratifying the current cabinet and the laissez-faire policies followed by Macri since taking office three years ago.

"We shall not abandon the path of change," he said.

Financial deregulation, critics note, was followed by $100 billion in added foreign debt under Macri, as well as a record $31 billion current account deficit last year alone.

News of this deficit led in April to the first serious run on the peso - $4.3 billion in a week.

Excluding Macri's December 17, 2015, devaluation, the peso had its sharpest one-day fall today, in percentage terms, since a 24% jump in the dollar on March 22, 2002 - at the depths of the convertibility exit crisis.

That crisis - which like the current one was preceded by a speculative bubble, doubling of foreign debt, and an IMF bailout - resulted in riots and the resignation of then-President Fernando de la Rúa.

De la Rúa, who like Macri enjoyed the support of the IMF, is himself a vocal supporter of the right-wing Macri administration.

At: https://money.cnn.com/2018/08/30/news/economy/argentina-interest-rates-currency/index.html

A billboard outside a Buenos Aires currency exchange advertises yesterday's record of 34.50 per dollar; it closed today at 39.87 pesos.

The sign held by the senior citizen below reads "Macri: Enough!"

[Judi Lynn]

1. Good for the protester, and the person who took his photo. No doubt he will have company soon.

It's a huge surprise he is the only one with the courage to appear there now!

Having the author of the fairly recent debacle openly supporting Macri should have been all it took for people to avoid voting for him. What more could they need?

It seems so likely as time passes it will be revealed that the election results were entirely bogus in the first place.

Things must be getting somewhat tense as people start to realize it's probably NOT going to get better for them without a different approach from different management.

[sandensea]

2. He was alone in his protest - until just now.

Last edited Thu Aug 30, 2018, 08:13 PM - Edit history (2)

About an hour ago, university faculty and students arrived for their scheduled protest in front of Congress.

What began as a protest against college budget cuts, is sprading throughout downtown Buenos Aires and turning into a massive demonstration against Macri's hypocrisy and rank incompetence.

[Judi Lynn]

3. That's wonderful. How exciting! They are all brave people, knowing how liberal fascist leaders are

with police and military violence against protesters.

Hope they can make a credible showing for the sane side downtown tonight.

Thank you!