Argentinas central bank on Thursday raised its benchmark interest by 15 percentage points to 60 percent, the highest in the world, after the peso plummeted to a new record low.
The move comes one day after President Mauricio Macri announced he had requested the International Monetary Fund to speed up disbursements from a $50 billion credit line, in order to demonstrate the country had enough cash on hand to fund the 2019 budget without going further into debt.
Earlier on Thursday the peso fell to a fresh record low of 40.00 per U.S. dollar. It pared some of its declines following the central bank announcement. The peso is down 49 percent this year.
Macris government has struggled in the past five months to convey a viable strategy to shore up the economy, cut budget and current-account deficits, and tame inflation running at more than 30 percent a year.
While analysts have praised moves such as obtaining the IMF credit line in June and previous rate increases, theres also lingering suspicion that officials lack the political will to make the spending cuts and tax increases necessary to tame inflation and restore growth.
The IMF said on Wednesday it will review the timing for doling out the remaining funds from the loan and collaborate with Argentina on a plan to bolster the economy.
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ET Markets
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