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Argentina’s Line in the Sand for the Peso Is Holding Firm

Argentina’s Line in the Sand for the Peso Is Holding Firm

(Bloomberg) -- Argentina has drawn a line in the sand for the peso at 55 to the dollar -- and it seems to be holding.

Dollar auctions by the central bank and the Economy Ministry have kept the peso near the same level all week, even as a debate rages about a possible sovereign default and currency controls. The peso closed at 55.09 per dollar, little changed from the previous day.

Argentina’s Line in the Sand for the Peso Is Holding Firm

“It would seem that the level at which they want to contain the exchange rate is approximately 55/USD,“ said Juan José Ciro, chief financial officer at Banco CMF. Wednesday’s “tenders seem to reflect exactly that.”

The central bank sold $94 million and the Ministry of Economy another $60 million in the foreign exchange market Wednesday, while new limits on holdings of dollars by commercial banks limited demand. The signal seems to have been strong enough to curb dollar demand on Thursday, with the peso remaining stable without further dollar sales by the central bank.

Argentina’s Line in the Sand for the Peso Is Holding Firm

The trading volume in the immediate liquidation market was $128 millions Thursday, the lowest in three years, according to data collected by Bloomberg.

When the exchange rate is well below 55, the authorities don’t use tenders to sell dollars and “prefer to store ammunition for when they need it at higher levels,“ Ciro said. The currency has fallen 32% this year, the worst performance in emerging markets tracked by Bloomberg.

Original Story:
Argentina usa sus dólares para fijar ‘piso cambiario’ en 55/USD

Reporter on the original story: Ignacio Olivera Doll in Buenos Aires at ioliveradoll@bloomberg.net

Editors responsible for the original story: Andrea Jaramillo at ajaramillo1@bloomberg.net, ;Carolina Millan at cmillanronch@bloomberg.net, Philip Sanders, Alec D.B. McCabe

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