Argentina Central Bank Says Will Allow Managed Peso Float | Investing News

BUENOS AIRES (Reuters) – Argentina’s central bank said on Thursday that it would allow a managed float of the peso currency and abandon its current “uniform daily devaluation” strategy as it seeks to adapt its monetary policy amid sharpening economic turmoil.

The move comes with the gap between the official exchange rate and the rate quoted in the country’s informal currency markets close to 93% due to the distrust of investors and strong black market demand for dollars.

Among a series of measures, the bank said it would block senior public officials from buying and accumulating foreign currency and would move to facilitate the purchase of Chinese yuan against Argentine pesos for foreign trade operations.

A central bank source said that the entity would offer trades at 76.95 pesos per dollar

at Friday’s open, around 0.91% weaker than the close on Thursday.

Argentina’s government had recently tightened capital controls, which had sparked investor jitters and raised concerns about economic growth prospects. The controls were first imposed last year to stem a decline in foreign currency reserves.

A second bank source said that the plan for pricing on Friday was part of a move to “abandon uniform devaluations and introduce greater volatility”, adding that it meant that the daily price change would be less uniform going forward.

Argentina’s center-left Peronist government separately temporarily lowered taxes on exports of soy and other products on Thursday in a move to boost trade and help revive a flagging economy set to contract 12% this year.

The bank also increased the important overnight repo rate to 24%, from the current 19%.

(Reporting by Jorge Otaola; Writing by Dave Sherwood; Editing by Christopher Cushing)

Copyright 2020 Thomson Reuters.

Source Article