Argentina’s currency continued its downward spiral in early trading Monday, as the dollar shot to a record 25.50 pesos.
Tension is rife in Buenos Aires following the government’s decision last week to turn to the International Monetary Fund for a line of financing.
Media reports suggest that the Central Bank will sell US$5 billion in reserves to again attempt to put the brakes on the country's plummeting peso.
“Breaking!!!! The Central Bank will offer US$ 5 billion today. It will come at a price of 25 pesos”, wrote Clarin journalist Marcelo Bonelli on his Twitter account.
Half of all outstanding short-term Lebac notes expire on Tuesday, some $670 billion worth, which the Central Bank has been buying in an effort to avoid further damage to the peso.
“A failure in rolling over the maturing Lebac stock would lead to a disorder bid on the dollar and renovated capital outflow,” JPMorgan analysts Diego Pereira and Lucila Barbeito wrote in a note last week.
Speculators have been selling en masse as Central Bank Governor Federico Sturzenegger gobbles up everything that comes his way. Tuesday’s sale will be closely watched.
DOLLAR
On Monday, Banco Nación had a buying rate of 24.50 pesos and a selling rate of 25.50, for a 7.4 percent increase on rates at close of business last Friday.
The peso has lost 30 percent of its value since the start of the year.
See also: Argentine economists weigh in on IMF deal
-TIMES
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