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ECONOMY | 20-02-2019 17:10

Peso closes at $40.71 to the dollar as demand for US currency spikes

The peso suffered blows Wednesday, reaching its highest rate in four months.

The Argentine peso suffered a sharp fall of 2.8 percent against the dollar Wednesday, at one point surpassing 41 pesos to the dollar. The exchange rate later fell, however, to close at 40.71 pesos per greenback, La Nación reported. It was the highest figure seen in four months.

Argentines are keen watchers of the exchange market, especially of late given the national currency's devaluation of almost 50 percent over the course of 2018. After two months of relative calm, the peso has now depreciated a total of 9.07 percent since December 31. 

There's still a ways to go for the country to reach its exchange intervention ceiling of 49 pesos per dollar, settled on by the government and the International Monetary Fund (IMF) under the terms of its US$57-billion bail-out deal sealed last year. If the exchange rate exceeds this ceiling, the Central Bank is authorised to sell up to US$150 million a day to intervene in the situation.

The IMF is monitoring compliance with the agreement to decide whether or not to approve the next disbursement from Argentina's deal, worth US$10.7 billion and due in March. The financial agency agreed to cede to the country, in mid-2018, a lifeline of US$57 billion, which will be used for the government to meet its debt obligations until 2021, after interrupting in April 2018 the flow of loans granted by the government.

Argentina's economy has been officially in recession since the fourth quarter of last year, and annual inflation hit a 28-year high of 47.6 percent in 2018. Retail prices rose 2.9 percent in January, according to an official statistics agency, and a higher increase is expected in February, according to private consultants.

-TIMES/AP

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