Bloomberg — Argentinian central bank will raise its basic interest rate in a bid to prop up its currency and curb inflation that is approaching 100% by the end of the year, according to a person with direct knowledge of the move.
The central bank raised its benchmark Leliq rate by 550 basis points to 75%, after consumer prices jumped nearly 79% a year in August, the fastest pace in 30 years. The decision is expected to be announced later on Thursday.
A spokersperson for the central bank didn’t immediately reply to a request for comment.
The move comes after central bank President Miguel Pesce and Economy Minister Sergio Massa affirmed, in a meeting with International Monetary Fund Managing Director Kristalina Georgieva on Monday, their commitment to implement the country’s $44 billion deal with the IMF. A key element of the accord includes keeping interest rates above the rate of inflation.
Economists surveyed by the central bank forecast inflation will accelerate to 95% by the end of the year.
Pesce and Massa face added pressure after they allowed a temporary exchange rate devaluation for producers of soy -- the nation’s biggest export -- in a bid to replenish the country’s dwindling international reserves.
The central bank has been propping up the official peso rate, currently at 143 per dollar. The blue-chip swap rate, an implied exchange-rate based on the difference in prices between Argentine stocks and their American Depositary Receipts, stands at 297 per dollar.
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