Economy
In reply to the discussion: STOCK MARKET WATCH -- Friday, 24 January 2014 [View all]Demeter
(85,373 posts)Argentina devalued the peso the most in 12 years after the central bank scaled back its intervention in a bid to preserve international reserves that have fallen to a seven-year low.
The peso has plunged 12.7 percent over the last two days to 7.8825 per dollar at 3:45 p.m. in Buenos Aires, after falling to as low as 8.2435, according to data compiled by Bloomberg. The decline in the peso marks a policy turn for Argentina, which had been selling dollars in the market to manage the foreign-exchange rate since abandoning a one-to-one peg with the U.S. dollar in 2002.
President Cristina Fernandez de Kirchner, who said May 6 that the government wouldnt devalue the peso, is struggling to hold onto dollar reserves which have fallen 31 percent to $29.4 billion amid annual inflation of more than 28 percent. Reserves are the governments only source to pay foreign creditors. Since changing her economy minister, cabinet chief and the head of the central bank on Nov. 18, the peso has fallen 25 percent, the most in the world, according to data compiled by Bloomberg.
Theyre running out of cash and theyre sitting in the corner at the moment, Phillip Blackwood, who oversees $3.5 billion in emerging market assets as a managing partner at EM Quest Capital LLP, said in a phone interview from London. Theres a feeling in the market that theyre not going to intervene any more.
The tumble in the currency is the biggest since March 2002, the year the government abandoned a one-to-one peg with the U.S. dollar following a record $95 billion default...
http://www.bloomberg.com/news/2014-01-23/argentina-s-peso-plunges-17-as-central-bank-scales-back-support.html