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ECONOMY | 23-01-2018 12:35

Dollar hits record 19.61 pesos as Central Bank prepares interest rate cut

On Monday, Central Bank chief Federico Sturzenegger said there was "certain margin" to cut interest rates "gradually."

Currency exchange houses across Buenos Aires were selling a record-high dollar on Tuesday as expectations grew about an imminent cut to interest rates. 

The Central Bank is expected to announce on Tuesday afternoon a rate cut of between 0.75 to one percent.

At exchange houses, the dollar had soared 17 cents to a record 19.61 pesos by midday. The Central Bank, meanwhile, was buying dollars at a rate of 19.05 pesos and selling at 19.55.

On Monday, Central Bank chief Federico Sturzenegger said there was “certain margin” to cut interest rates “gradually.”

A BLOW FOR STURZENEGGER

In late December, the government backtracked on its inflation targets for 2018 from 10 to 15 percent, prompting the dollar to leap over the 19-peso mark.

The Central Bank had eyed off a target of 17 percent for 2017, but official annual inflation ended at 25 percent.

The December announcement was seen as a significant defeat for Sturzenegger who had resisted moves to lower the 2018 target.

Interest rates are expected to fall as the government focuses less on the mother of all battles, an abrupt and permanent decrease in inflation, and more on economic growth, which the government expects to reach 3.5 percent in 2018.

-TIMES/AGENCIES

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