Argentina's central bank hiked its benchmark interest rate a huge 10 percentage points to 91% on Thursday as it tries to tame high inflation and steady the peso currency, which has tumbled in black market trading over the last week, Reuters reported. The hike, the biggest since a market meltdown in August 2019, comes after the central bank (BCRA) had already lifted the rate last week by 300 basis points to 81% in an effort to control inflation running at 104% annually. The central bank confirmed the hike in a statement after Reuters earlier reported the move, citing bank sources.
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Argentina and the International Monetary Fund are going back to the drawing board on the country’s $44 billion program as a record drought is expected to push the country into recession, an Economy Ministry official said, Bloomberg News reported. All options are on the table in the fifth review of the IMF’s biggest program, including discussions on disbursements, said the official, who asked not to be named discussing private talks. An IMF spokeswoman didn’t immediately respond to a request for comment during weekend hours.
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The Argentine government is in talks to issue two dollar-bonds for up to $600 million each with separate guarantees from the World Bank and the CAF as collateral, a source from Argentina's Economy Ministry said on Friday, Reuters reported. The operation, which would take place in the coming weeks, would guarantee 60% of the issuance, and the notes would have a maximum maturity of five years, said the ministry source, who asked not to be identified. The intention is to issue two separate bonds, each with its own backing, for up to $600 million each, the source said.
Argentina's inflation rate is expected to have clocked in at an eight-month high of 7.1% in March, according to a Reuters poll of analysts, piling pressure on the government as it looks to tame spiraling prices that have pushed up poverty levels, Reuters reported. The South American country is battling annual inflation above 100%, one of the highest levels globally, which saps earning power and has sharpened a cost-of-living crisis, hurting the ruling Peronist coalition ahead of elections in October.
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Argentina's state oil company YPF has agreed to pay nearly $300 million to the creditors of one of its now-bankrupt subsidiaries after they sued the company in relation to a historical U.S. environmental case, Reuters reported. The case against Maxus Energy Corp., which YPF acquired in the 1990s, dates back to 2005, when the state of New Jersey successfully sued the subsidiary for the contamination of the Passaic River decades earlier. In 2016, Maxus Energy Corp. filed for chapter 11 protection in the U.S. Bankruptcy Court in Delaware.
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The International Monetary Fund’s executive board on Friday approved a $5.4 billion disbursement to Argentina, a key step forward in the government’s program that’s faced setbacks amid a worsening economic outlook, Bloomberg News reported. The board approved the funds after IMF staff finished the fourth review of Argentina’s $44 billion deal, the institution said in a statement. It brings total disbursements under the extended fund facility to $28.9 billion.
Fitch Ratings on Friday cut Argentina's foreign currency rating to "C" from "CCC-" citing an "imminent" default after the country ordered public sector bodies to sell or exchange their holdings of some sovereign dollar bonds, Reuters reported. A presidential decree said on Thursday that public sector bodies would have to sell or auction five local law dollar bonds maturing between 2029 and 2041, and to swap six foreign law dollar bonds for peso debt.
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Inflation of more than 100% in Argentina is erasing the advantage the country’s top companies used to have by booking revenue in US dollars, Bloomberg News reported. Investor darlings in the energy sector — natural gas and power producer Pampa Energia SA, pipeline operator TGS SA, and state-run oil driller and refiner YPF SA — are struggling with costs that are coming under pressure from rising prices, which surpassed 100% on an annual basis last month. In the past, Argentine energy companies could compensate for inflation on their balance sheets through revenues linked to the US dollar.
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Argentina’s central bank is considering raising its benchmark rate Thursday for the first time since September after annual inflation surged above 100% last month, Bloomberg News reported. The monetary authority’s board will consider an increase after leaving the key Leliq rate unchanged at 75% for several months, the people said, asking not to be named discussing internal decisions. The board hasn’t decided on the size of the hike in case they opt for such move, they said.
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Argentina’s annual inflation surpassed 100% last month, one of the world’s fastest rates, putting extra pressure on an economy that’s expected to fall into recession ahead of presidential elections this year, Bloomberg News reported. Consumer prices rose 102.5% in February from a year prior, the highest since late 1991 when the economy was cooling off from 3,000% hyperinflation. Prices rose 6.6% on the month, more than all estimates in a Bloomberg survey of analysts that had a 6% median forecast, according to government data published Tuesday.
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