Argentina’s Central Bank on Thursday increased its benchmark interest rate to 60 per cent — the world’s highest — in an effort to halt a sharp slide in the value of the peso, which plunged to a new record low.
The peso has tumbled more than 50 per cent so far this year, prompting Argentina to seek a US$50 billion financing deal with the International Monetary Fund.
But President Mauricio Macri has struggled to calm markets and bring confidence to Argentines who continue to lose purchasing power to one of the world’s highest inflation rates. Macri said Wednesday that he is now is asking for an early release of the IMF funds.
The peso slipped about 7 per cent against the US dollar Wednesday and was down another 15 per cent by midday Thursday, when it was trading at 39.6 to the US dollar.
The Central Bank said in a statement that it was hiking its benchmark interest rate in response to the current currency scenario and the risk of greater impact on local inflation. The rate had been set to 45 per cent earlier this month.