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Wednesday, November 25, 2020

The Argentinean Government Will Maintain Currency Devaluation Rate

The Argentinean government announced on Friday morning it will maintain a slow rate of currency devaluation despite rising pressure on the national currency peso and tumbling foreign reserves.

The Argentinean government announced on Friday morning it will maintain a slow rate of currency devaluation despite rising pressure on the national currency peso and tumbling foreign reserves.

During a press conference in capital Buenos Aires, Argentina’s economy minister Martin Guzman told local reporters that the country had a “serious problem” with its fiscal deficit because of the COVID-19 pandemic, pointing out that the “real” economy is showing “clear signs of recuperation” and that the devaluation didn’t reflect the true condition of Argentina’s macroeconomy.

Guzman also acknowledged that currency devaluation expectations are hurting the country’s economy, but said that exchange stabilization couldn’t be achieved “from one day to the other.”

Earlier this month, the central bank of Argentina said that it would allow a managed float of the peso currency and abandon its current “uniform daily devaluation” strategy as it seeks to adapt its monetary policy amid sharpening economic turmoil.

The gap between the official exchange rate and the rate quoted in Argentina’s informal currency markets reached 143 percent on Thursday because of the distrust of investors and strong black market demand for dollars.

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