Argentina's weakened peso tumbles to record low against the dollar


© Reuters. FILE PHOTO: A man shows Argentine pesos outside a bank in Buenos Aires’ financial district

BUENOS AIRES (Reuters) – Argentina’s struggling currency hit a record low against the dollar on Thursday, weakening over 4 percent to close at 42.5 pesos per dollar, a challenge for President Mauricio Macri as he looks to right the economy ahead of elections in October.

The peso, which had strengthened at the start of the year, has lost over 11 percent in 2019, renewing fears after a sharp sell-off in 2018 saw the Argentine currency lose around half its value against the greenback.

The currency remains, however, within the limits of a non-intervention trading band agreed with the International Monetary Fund (IMF) as part of a $56.3 billion deal last year. The upper limit of that band was 50.199 pesos per dollar on Thursday.

The record low stands in marked contrast to January and February when the central bank spent just shy of a billion dollars trying to weaken the peso when it strengthened outside the limit of the band.

“This is an really ugly signal (for the market),” said Federico Furiase, an Buenos Aires-based economist at consultancy Eco Go.

Argentina’s economy is shrinking and the country has one of the highest inflation rates in the world. On Wednesday, a central bank poll of economists increased their 2019 inflation forecast to 31.9 percent.

Analysts also see the peso weakening further to around 48 pesos per dollar by the end of the year, Goldman Sachs (NYSE:) said in a note on Wednesday, with uncertainties about the presidential election likely to drag the currency down.

Other Latin American currencies also fell on Thursday against a stronger dollar, which hit a near three-week peak against some currencies.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Comments

comments