BUENOS AIRES – Argentina’s Central Bank took even further strong monetary action on Thursday in a bid to counter the sharp decline in the peso relative to the United States dollar, raising its benchmark interest rate from 45 percent to 60 percent.
In a statement, the bank’s Monetary Policy Committee said it voted unanimously to meet and raise its policy rate “in response to the current exchange situation and the risk of it having a greater impact on inflation.”
The move comes just 17 days after the Central Bank raised its benchmark rate from 40 percent to 45 percent and is the latest in a series of increases in recent months.
It also comes just a day after Argentine President Mauricio Macri asked the International Monetary Fund to speed up the disbursement of funds from a $50 billion credit line, a decision that appears to have backfired by triggering even more market uncertainty.
The Central Bank, which also sold an additional $330 million in an auction of its reserves on Thursday, said in a statement that the policy rate would not be lowered until December at the earliest.
Despite the measures, the peso continued to plunge Thursday relative to the greenback, closing down 10.72 percent.
Since late April, when abrupt exchange-rate volatility led the government to seek out the credit line from the IMF, the peso has depreciated by more than 75 percent against the dollar.
Macri’s government blames Argentina’s financial woes on external factors such as crises in Turkey and Brazil, as well as a corruption scandal that has ensnared business leaders and officials in previous left-wing administrations headed by Cristina Fernandez and Nestor Kirchner, who died in 2010.
The country’s problems have been aggravated by rising interest rates in the US and accompanying capital flight from Argentina and other emerging markets.
The interest-rate hikes have come amid an economic contraction, with Argentina’s economy shrinking 6.7 percent in June relative to the same month of 2017.