Argentine Vice-President Cristina Fernández de Kirchner blamed the country’s US$44-billion agreement with the International Monetary Fund for a recent plunge in the value of the peso and wave of inflation pushing consumer price increases up over 100 percent.
Fernández de Kirchner, the most powerful leader in the ruling Frente de Todos coalition, criticised the IMF programme for prohibiting Argentina’s Central Bank from intervening in financial markets to tame currency volatility that triggered a 13 percent loss in the peso in parallel markets last week, fuelilng more inflation.
Economy Minister Sergio Massa notified IMF staff this week that the government wanted to change that condition and began market interventions. The IMF hasn’t commented on that policy shift.
“The IMF agreement prohibited the Central Bank from intervening in the currency market to avoid a sell-off,” Fernández de Kirchner, who called for a revision of the agreement she sees as “inflationary.”
IMF staff warned Argentina officials against intervening in markets to preserve its razor thin dollar reserves. Most economists in Argentina see inflation as being driven by the government’s money printing to finance government deficits, political infighting and lack of a credible economic plan.
Fernández de Kirchner pointed the finger at the IMF for the peso’s depreciation in recent days, though.
“What we fundamentally want is that they revise the conditions,” of the IMF deal, Fernández de Kirchner said. During her presidency, “the Central Bank intervened in the administration of the exchange rate — it couldn’t do this until this week when it took the decision.”
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by Patrick Gillespie, Bloomberg
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