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Argentina to extend currency band in 2019

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Argentina to extend currency band in 2019


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Position of peso remains precarious

Argentina to extend currency band in 2019

The Central Bank of Argentina will extend the use of a currency trading band into next year and will likely manage peso fluctuations less than at present. This would be a sign that the country’s IMF-backed monetary policy is bearing fruit at the end of what was a horrible year.

Central Bank President Guido Sandleris in an interview with Bloomberg in Buenos Aires on Friday: "We are going to continue working with zones of intervention and non-intervention during next year," The pace of adjustment will likely be "a little bit lower than it is now. Right now it’s at 3 percent. It could be a little less."

The peso fell in early trading on Monday. It was 0.2 percent down at 35.55 to the US dollar in Buenos Aires.

Sandleris has overseen the roll-out of the Central Bank’s month-old monetary policy implemented after the International Monetary Fund agreed in September to boost its bailout for South America’s second-biggest economy to $56.3 billion.

The peso, now the worst performing currency in emerging markets of 2018, gained nearly 14.7 percent against the dollar in October, the most since data first became available in 2003. Inflation expectations cooled in October after three months of turbulence and government bond yields have stabilized, too.

Under Sandleris’s plan, the peso is allowed to trade in a "non-intervention zone” of about 35 to 45 pesos per dollar, and the range is adjusted 3 percent every day compared to its value a month earlier.

Despite the recent gains, Sandleris isn’t celebrating. He sees major international and domestic economic risks ahead. The bank ditched inflation targeting for what many analysts see as an aggressive, even drastic, policy mix that could exacerbate a gathering recession. The end of the easy money era globally isn’t making life any easier either.

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Source: Google News Argentina | Netizen 24 Argentina

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