Argentine Peso Heads For Worst Week Since 2015 After IMF Meeting

(Bloomberg) -- The Argentine peso headed for its worst week since December 2015 after the International Monetary Fund said it wants to conclude talks on a possible credit line as soon as possible.

The peso fell 3.9 percent to 23.6 per dollar at 1:44 p.m. in Buenos Aires, extending the weekly drop to 7.6 percent. Earlier, the central bank sold dollars and bought short-term notes known as Lebacs to stem the peso’s decline to a record 24.1.

The International Monetary Fund’s Christine Lagarde said on Thursday that the lender is seeking a rapid resolution for talks with Argentina over the establishment of a stand-by arrangement. That did little to calm the world’s worst currency on Friday. The peso fell as much as 6.5 percent at one point before the central bank intervened, which did little to calm jitters.

Argentina, which is said to be seeking a credit line of as much as $30 billion, will resume talks with IMF next week. The government is in also talks with the World Bank, Inter-American Development Bank and Development Bank of Latin America (CAF) for additional lines of credit, Finance Minister Luis Caputo said on Thursday evening.

The central bank will face its first major test at Tuesday’s auction of Lebacs, where about $30 billion of notes need to be rolled over before they expire on Wednesday.

The central bank also halted adding liquidity to markets through their reverse repo of as much as 47 percent, according to a person with knowledge of the matter. Halting the reverse repo stops extra pesos from entering the market, which prevents traders from using those pesos to buy dollars. The center of the bank’s 7-day repo range of 40 percent is used as the monetary policy rate.

To contact the reporters on this story: Ignacio Olivera Doll in Buenos Aires at ioliveradoll@bloomberg.net, Carolina Millan in Buenos Aires at cmillanronch@bloomberg.net.

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Andres R. Martinez, Jorgelina do Rosario

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