Argentina

Argentina's government is bolstering its economic defenses as it battles runaway inflation that hit 109% in April, fast draining central bank foreign currency reserves, a weakening peso and simmering market fears of a sharp-shock devaluation, Reuters reported. The economy ministry announced a package of measures on Sunday including new interest rate hikes, more central bank intervention in currency markets and fast-tracked deals with creditors after inflation overshot all forecasts last week. An official source told Reuters the rate hike would be 600 basis points, bringing the rate up to 97%.

Argentina will unveil a set of emergency measures in a bid to stem additional currency losses, including a large increase to its key interest rate, as inflation spirals out of control in the run up to presidential elections, according to officials at the Economy Ministry and the central bank, Bloomberg News reported. The monetary authority will raise its benchmark rate by 600 basis points to 97% on Monday while boosting intervention in the foreign exchange market, the officials said, asking not to be named before measures are formally announced by Economy Minister Sergio Massa.

Argentina's monthly inflation rate for April is expected to clock in at 7.5% according to a Reuters poll of analysts, keeping the annual rate at its quickest pace since the country emerged from a hyperinflation crisis in the early 1990s, Reuters reported. Argentina, a major global grains supplier, is battling 12-month inflation above 100%, which is one of the highest rates globally. This is hurting the centre-left Peronist administration, which had hoped to ease financial pressure on voters ahead of a tough election challenge this October.

Argentines withdrew over $1 billion of US dollar deposits from the banking system from late March to the end of April as speculation spread about a potential currency devaluation in the official exchange rate, Bloomberg News reported. Dollar deposits dropped from nearly $16.4 billion on March 20 to just below $15.3 billion by the end of April, a 6.7% decline, according to central bank data released Friday. In Argentina, checking accounts are denominated in pesos but savings accounts can be denominated in US dollars, a reality after decades of currency crises and runaway inflation.

Argentina is seeking new easing of targets in its $44 billion deal with the International Monetary Fund and faster payouts, and is pushing to get key IMF members the United States and Brazil to support it, Reuters reported. The country is expected to return to talks with the IMF on Thursday over amending the deal, which has come under strain amid a historic drought that has battered the country's key cash crops soy and corn, a senior economy ministry official said.

Argentina’s international reserves have tumbled to their lowest since 2016 as the central bank drains its coffers to defend the increasingly beleaguered peso, Bloomberg News reported. The currency tumbled 13% in parallel markets last month to a record low as a historic drought sapped key crop exports, fueling a dollar shortage at the same time that inflation accelerates past 100%.

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.

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.

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.