Money in Argentina
Argentina - Money
Central Bank tightens FX intervention rules to curb inflation
At its latest meeting held on 28 February, the Central Bank of Argentina (Banco Central de la República Argentina, BCRA) announced it would tweak its guidelines to intervene in the exchange rate market in order to intensify its fight against inflation. At the same time, the BCRA stated it has overachieved the 0% monetary base growth target and will maintain its current stance. Starting 1 October, as stipulated in the standby agreement with the IMF, the Bank abandoned its previous inflation targeting regime to adopt a rigid monetary rule which consists of keeping the monetary base unchanged until June 2019. The new monetary rule thus sets a 0% monthly growth for the monetary base, defined as currency in circulation plus reserve requirements.
An uptick in inflation in January led the Central Bank to tighten its guidelines for intervention in the FX market. The month-on-month variation in prices accelerated in January following three consecutive months of deceleration, on the back of higher food and regulated prices. The Bank therefore increased the limit of daily sales of dollars in the foreign exchange market in the event that the peso moves above the non-intervention band from USD 75 million to USD 150 million. It also reduced the limit of daily dollar purchases if the peso moves below the lower limit of the non-intervention price band to USD 50 million from USD 75 million. This decision essentially provides further firepower to the Central Bank to limit potential depreciations in the peso and thus to prevent exchange-rate pass-through on inflation.
The Central Bank stands ready to intervene in the foreign exchange market if the peso moves outside the non-intervention band or in the event of considerable exchange rate volatility. As part of the agreement with the IMF, in addition to the monetary base rule, the Central Bank adopted an FX regime, which combines a free-floating range for the peso with the prevention of excessive ARS/USD fluctuations. As the Banks will continue to limit growth in the monetary base and inflation subsequently moderates, LELIQ interest rates will edge down, with panelists participating in the LatinFocus Consensus Forecast seeing the LELIQ rate ending 2019 at 36.57% and 2020 at 25.50%.
Argentina - Money Data
|Money (annual variation in %)||25.7||28.9||28.2||30.4||26.0|
5 years of economic forecasts for more than 30 economic indicators.
Argentina Money Chart
Source: Argentina Central Bank and FocusEconomics calculations.
|Bond Yield||6.69||0.15 %||Dec 17|
|Exchange Rate||41.26||0.45 %||Mar 11|
|Stock Market||33,791||2.26 %||Mar 11|
Get a sample report showing our regional, country and commodities data and analysis.
Start Your Free Trial
Start working with the reports used by the world’s major financial institutions, multinational enterprises & government agencies now. Click on the button below to get started.
March 14, 2019
According to the National Statistical Institute (INDEC), national consumer prices jumped 3.8% over the previous month in February, coming in above January’s 2.9% month-on-month increase. February’s reading marks the second consecutive month of acceleration in month-on-month price increases.
March 11, 2019
The Argentine peso depreciated in the last few weeks, despite the Central Bank’s tight monetary policy stance.
March 6, 2019
Industrial production plummeted 10.8% over the same month of last year in January, according to data released by the National Statistical Institute (INDEC) on 6 March.
February 28, 2019
The monthly indicator for economic activity (EMAE, Estimador Mensual de Actividad Económica) contracted 7.0% in annual terms in December, a somewhat softer drop than the 7.5% plunge recorded in November.
February 28, 2019
At its latest meeting held on 28 February, the Central Bank of Argentina (Banco Central de la República Argentina, BCRA) announced it would tweak its guidelines to intervene in the exchange rate market in order to intensify its fight against inflation.