Argentina’s central bank on Thursday raised its benchmark interest by 15 percentage points to 60 percent, the highest in the world, after the peso plummeted to a new record low.The move comes one day after President Mauricio Macri announced he had requested the International Monetary Fund to speed up disbursements from a $50 billion credit line, in order to demonstrate the country had enough cash on hand to fund the 2019 budget without going further into debt.Earlier on Thursday the peso fell to a fresh record low of 40.00 per U.S. dollar . It pared some of its declines following the central bank announcement. The peso is down 49 percent this year.Macri’s government has struggled in the past five months to convey a viable strategy to shore up the economy, cut budget and current-account deficits, and tame inflation running at more than 30 percent a year.While analysts have praised moves such as obtaining the IMF credit line in June and previous rate increases, there’s also lingering suspicion that officials lack the political will to make the spending cuts and tax increases necessary to tame inflation and restore growth.The IMF said on Wednesday it will review the timing for doling out the remaining funds from the loan and collaborate with Argentina on a plan to bolster the economy. </s> BUENOS AIRES, Argentina — Argentina opened discussions with the International Monetary Fund on Tuesday about obtaining a “line of financial support”, President Mauricio Macri announced amid a bout of market turbulence in Latin America's third-largest economy.

In a televised speech, Macri said Argentina's economy had enjoyed favourable conditions during the first two years of his presidency.

“But this context is changing. We are among the countries of the world that are most dependent on foreign financing, a product of the enormous public spending we inherited and are putting in order,” he said, explaining the decision to open talks with the IMF.

Macri said he had his first conversation with IMF Managing Director Christine Lagarde, but did not say how big a line of credit Argentina is seeking.

IMF financing would strengthen his “programme of growth and development, giving us greater backing to confront this new global scenario and avoid a crisis like those we have had in our history”, he said.

Lagarde later said, “Discussions have been initiated on how we can work together to strengthen the Argentine economy, and these will be pursued in short order.”

The Argentine peso, which dropped 4.61 per cent to 23.41 to the US dollar in opening trades yesterday, strengthened slightly after Macri's speech at 23.06. </s> Argentina has appealed to the International Monetary Fund for an emergency credit package in an effort to avoid a financial crash and rescue its faltering peso currency from a long downward slide against the dollar.



The announcement, against a backdrop of surging interest rates and stubbornly resistant inflation, brought back echoes of Argentina’s monetary crash and foreign debt default in December 2001 when the peso dropped overnight to a quarter of its value against the dollar and bank accounts were frozen nationwide.

“This will allow us to face the new global scenario and avoid a crisis like the ones we have faced before in our history,” president Mauricio Macri said, announcing the loan in a televised address.

Macri said international conditions had changed since he assumed office in December 2015. “During the first two years we have had a very favourable global context, but today that is changing, global conditions are becoming increasingly complex due to several factors: interest rates are rising, oil is rising, currencies of emerging countries have been devalued, all variables that we do not control.”

Last week Argentina’s central bank raised interest rates from 33.25% to 40% in a bid to halt the slide in the peso.

The Argentinian currency has been losing value against the dollar at a steady rate in the last few months, falling from under 20 pesos to the dollar to 24 pesos on Tuesday despite the latest rate rise. The peso has depreciated by 18% so far this year.

Government sources quoted in Argentina suggested that Macri will be requesting $30bn from the IMF at below market interest rates. “It’s a large loan that justifies paying the political cost,” the daily Clarín said.

Shoring up the value of the peso has proven a heavy drain on central bank reserves in the last months. “Going to the IMF at 4% is saving abut half on the interest rate,” tweeted Elisa Carrió, head of the Civic Coalition (Coalición Cívica) party that forms part of Macri’s Cambiemos governing coalition. “This will allow us to be covered until 2019.”

Other members of the Cambiemos coalition were less pleased by the announcement. “More than an agreement with the IMF, what is needed is an agreement between Argentinians,” said Ricardo Alfonsín of the Radical party, also part of Cambiemos. “I’m worried by the IMF’s conditions. With time, the remedy could prove worse than the disease.”

Macri said he had spoken to IMF director Christine Lagarde in order to kick start negotiations for the loan.

Cornered by lacklustre growth, rising retail prices, diminishing popularity and a smaller-than-expected soy harvest, Macri’s economic plan has been heavily dependent on foreign financing, which had dried up in recent months, prompting Tuesday’s appeal to the IMF for a line of credit.

Last month the IMF reduced its growth forecasts for Argentina during 2018 from 2.5% to 2%. The government also seems unlikely to meet its projected inflation rate of only 15% for 2018, with the IMF predicting 19.2% instead. </s> BUENOS AIRES, Argentina — President Mauricio Macri said Tuesday that Argentina has begun talks on a financing deal with the International Monetary Fund following a sharp devaluation of its currency and amid a difficult "global scenario."

Argentina was forced recently to impose three interest rate hikes to halt a sharp devaluation of its peso.

Macri said he's in talks with IMF Director Christine Lagarde to obtain a flexible credit line to combat economic woes at home and a complex situation worldwide that he said includes rising interest rates, higher oil prices and a depreciation of emerging market currencies.

"The problem we have is that we're one of the countries that depends the most on external financing," Macri said in a televised address. "Faced with this situation, and preventively, I've started conversations with the International Monetary Fund ... A few minutes ago I spoke with Christine Lagarde, and she confirmed we would start working on an agreement today."

He did not say how much Argentina is asking.

The peso fell to a historic low versus the U.S. dollar and Argentina's debt sank in price last week after a string of monetary and fiscal policy decisions that have been criticized by investors.

The government's woes began in December when investors began doubting its commitment to curb consumer prices after it announced a rise in its inflation target to 15 percent. Argentina then lifted its benchmark interest rate to 40 percent and tightened the fiscal deficit target.

"Today we're here to complement those announcements," Treasury Minister Nicolas Dujovne said in a press conference, adding that IMF financing was the best option to protect Argentina from global risks.

Many Argentines have bad memories of the IMF, believing its policies contributed to Argentina's worst economic collapse in 2001. The crisis was so bad that one of every five Argentines was out of work. The peso, which had been tied to the dollar, lost nearly 70 percent of its value. Banks froze deposits. More than 20 people died in protests and looting as the economy unraveled. Argentina eventually defaulted on a debt of more than $100 billion and saw a revolving door of five presidents in just two weeks.

But Dujovne reassured Argentines, saying that the IMF "today is very different than the one we knew 20 years" ago. "It has learned lessons from the past, and I repeat — it has helped our gradual program (of policies)."

Macri, a conservative, came into power in 2015 promising to cut government spending to boost Argentina's troubled economy. But while Macri struggles to reduce the country's high fiscal deficit and tame inflation, Argentines continue to lose purchasing power and many are growing frustrated with rises in fuel and transportation costs.

Argentina's Merval stock index recovered after Macri's announcement, and was falling about 3 percent after starting the day down at about 5 percent. The peso also bounced back to close at 22.8 per dollar after having plunged to a record low of 25.5 earlier in the day.

The IMF flexible credit line is designed specifically for countries with strong fundamentals, a track record of solid policy implementation, and a commitment to continue to implement sound policies and take appropriate corrective action whenever warranted, Goldman Sachs economist Alberto Ramos said in a research note.

"It is unclear to us if Argentina truly fits this description: while the authorities are certainly orthodox and market friendly and committed to implement sound policies, the country's fundamentals are hardly strong," he said. </s> BUENOS AIRES, Argentina — Argentina's Central Bank on Thursday increased its benchmark interest rate to 60 percent — 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 percent so far this year, prompting Argentina to seek a $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 percent against the dollar Wednesday and was down another 15 percent by midday Thursday, when it was trading at 39.6 to the 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 percent earlier this month. </s> • The Central Bank of Argentina raised its benchmark interest rate to 60%.
• On Wednesday, Argentine President Mauricio Macri said he has asked the International Monetary Fund to speed up bailout payments to the country.
• Watch the Argentine peso in real time here.

Argentina's central bank hiked rates by 15 percentage points to 60% on Thursday after the peso continued to slide despite the country already having the highest borrowing rates in the world.

The Central Bank of Argentina raised its benchmark interest rate up from 45% after the peso slid more than 8% to fresh lows. It is the worst-performing emerging market currency of 2018.

The rate hike comes as the International Monetary Fund, which has extended Argentina the largest credit line in its history, considers speeding up bailout payments to the country. Argentine President Mauricio Macri said on Wednesday he had requested IMF do so in order to "eliminate any uncertainty that was created before the worsening of the international outlook."

As part of the three-year standby agreement, the government has received $15 billion so far and was poised to get an additional $3 billion next month.

Citing a ballooning debt burden and a weakening peso, the rating agency Moody's on Tuesday cut its growth forecast for Argentina. It estimates gross domestic product will contract by 1% next year, compared with previous expectations for a 3% expansion. </s> BUENOS AIRES, Argentina — Argentina’s Central Bank on Thursday increased its benchmark interest rate to 60% — the world’s highest — in an effort to halt a sharp slide in the value of the peso, which plunged to a record low.

The peso fell more than 13% against the dollar on Thursday, closing at an all-time low of 39.2 per greenback, after slipping about 7% the day before.

The Central Bank said in a statement that it was hiking its benchmark interest rate by 15 percentage points to 60% in response to the currency problems and the risk of greater impact on local inflation, which is already running at about 30% a year.

The tumult in the exchange market came a day after President Mauricio Macri said he was asking for an early release of some IMF funds under an US$50 billion backup financing arrangement approved earlier.

Some experts said the announcement, combined with the interest rate hike, had the unintended effect of fuelling the crisis of confidence.

“I think today’s interest hike announcement will do nothing but leave investors even more jittery,” said Monica de Bolle, senior fellow at the Peterson Institute for International Economics.

“I’m finding it difficult to understand why, after yesterday’s announcement about front-loading more of the IMF funding, the government thought the hike was warranted. Hyperactivity starts to look like desperation.”

Macri has struggled to calm markets and bring confidence to Argentines who continue to lose purchasing power. Many are frustrated with layoffs, higher utility rates and a rise in poverty levels.

Many also have bad memories of the IMF and blame its free-market economic policies for contributing to the country’s worst crisis in 2001-2002, when one of every five Argentines went unemployed and millions fell into poverty.

Seeing journalists filming screens showing the exchange rates in downtown Buenos Aires, Ruben Montiel, 55, burst out: “Macri is an embarrassment!

“You can’t live like this. The prices of everything go up on a daily basis,” he said. “There’s no work, utility rates have gone through the roof … people are sleeping on the streets.”

Macri, a pro-business conservative who came into office in 2015, had promised to trim Argentina’s fiscal deficit, reduce poverty and curb inflation. He cut red tape and tried to reduce the government’s budget deficit by ordering layoffs and cutting utility subsidies, but it triggered labour unrest.

Then in December, officials announced a rise in the inflation target, which caused investors to begin doubting Macri’s commitment to taming price rises.

Meanwhile, the peso slumped against the dollar as rising U.S. interest rates lured investors to pull greenbacks out of Argentina.

That caused jitters among Argentines, who have been used to stashing away dollars as a cushion since the 2001 crisis, when banks froze deposits and put up sheet-metal barricades as thousands of protesters unsuccessfully tried to withdraw their savings. Dozens died in protests and looting in December 2001 as the economy unraveled and Argentina eventually suffered a record $100 billion debt default.

“The government will need to shuffle its cabinet and strike deals with provincial governors for next year’s budget,” said Argentine economist Marcos Buscaglia. “In the short-term, the government just needs to stop this crisis. </s> BUENOS AIRES, May 8 (Reuters) - Argentina is seeking a financing deal with the International Monetary Fund to stabilize its finances after two weeks of financial market volatility that saw the peso hit new lows and the central bank jack interest rates up to 40 percent.

"I spoke with (IMF) Director Christine Lagarde, and she confirmed we would start working on an agreement today," Argentina's President Mauricio Macri said in an address to the nation.

The move was remarkable, given that many people still blame the IMF's austerity requirements for policies that led to a financial and economic meltdown in 2001 to 2002 that hurled millions of middle class Argentines into poverty.

"This will allow us to strengthen our program of growth and development, giving us greater support to face this new global scenario and avoid crises like the ones we have had in our history," Macri said.

Argentine markets have been battered over the last two weeks by local policy uncertainty and regional factors. Other currencies in Latin America have also weakened as risk-averse investors dumped emerging market assets.

The local peso currency closed down 2.79 percent at 22.6 per U.S. dollar after touching an all-time low 23.5 to the greenback during the session.

Lagarde said in an IMF statement: "Discussions have been initiated on how we can work together to strengthen the Argentine economy and these will be pursued in short order."

Local newspaper Clarin said Argentina would seek at least $30 billion in financing. The government and an IMF spokesman declined to comment on the amount.

Local markets reacted positively to Tuesday's announcement. The peso regained some of the ground it had lost earlier in the day and the Merval stock index, which started the day 5.3 percent lower, cut its losses to 3.43 percent.

"We have decided to seek preventive financing for Argentina, to give stability to the market," Treasury Minister Nicolas Dujovne said at a news conference.

He said the deal would not increase the country's indebtedness, but rather provide a substitute for issuing bonds that would require the government to pay higher interest rates.

Dujovne said the policy conditions to be required by the IMF in exchange for the financing deal had not yet been discussed. A spokesperson for the Treasury said the minister would travel late Tuesday for an initial meeting with Lagarde.

"An IMF line of credit is the least expensive option for growth in Argentina. It will help lower country risk," Miguel Kiguel, a former Argentine finance secretary who runs local consultancy Econviews, said in a post on Twitter.

Macri was elected in late 2015 on an investment-friendly platform following eight years of populist rule under his free-spending predecessor Cristina Fernandez.

He has reduced utility subsidies, an unpopular move that increased water and heating bills for average Argentines already beleaguered by high inflation.

Last week, the peso hit a then-all-time low of 23 per greenback, prompting the government to announce additional fiscal belt tightening and the central bank to hike its key interest rate to 40 percent on Friday.

In 2016, the Fund conducted its first Article IV consultation visit in a decade to Argentina. It praised Macri's pro-market reforms, and said more such measures were needed. </s> Argentina is to hold talks with the International Monetary Fund (IMF) about financial backing for the country's volatile economy, according to its president.

Mauricio Macri said the move would help Argentina to "strengthen our programme of growth and development".

The peso has lost a quarter of its value in the past year amid President Macri's pro-market reforms.

Last week the central bank raised interest rates from 33.25% to 40%.

In a recorded television statement, Mr Macri said Argentina was suffering as a result of high oil prices and the expectation that US interest rates would go up in the coming months.

"Just a few minutes ago I spoke with director Christine Lagarde, and she confirmed we would start working on an agreement today."

Describing Argentina as a "valued member" of the IMF, Ms Lagarde said: "Discussions have been initiated on how we can work together to strengthen the Argentine economy and these will be pursued in short order."

Argentina is in the middle of a pro-market economic reform programme as Mr Macri seeks to reverse years of protectionism and high government spending under his predecessor, Cristina Fernandez de Kirchner.

Inflation, a perennial problem in Argentina, was at 25% in 2017, behind Venezuela as the highest in Latin America.

This year, the central bank has set an inflation target of 15% and has said it will continue to act to enforce it.

Last week's rate rise to 40% was the third increase in eight days in an attempt to boost the peso.

News of the new talks may be controversial in some quarters. Many people in Argentina still blame the IMF for the policies that led to the 2001 financial and economic crisis. The country defaulted on $80bn (£59bn) of sovereign debt - the biggest in history.

Millions of middle class Argentines were plunged into poverty as a result.

However, Mr Macri said the new negotiations with the IMF would give the country "greater support to face this new global scenario and avoid crises like the ones we have had in our history".

Markets reacted positively to the news, with both local shares and the peso recovering some ground.

Miguel Kiguel, a former Argentine finance secretary who runs local consultancy Econviews, tweeted: "An IMF line of credit is the least expensive option for growth in Argentina."
President of Argentina Mauricio Macri announces talks with the International Monetary Fund on financial support for the country's economy. The Central Bank of Argentina interest rate is now at 40%, inflation at 25% and the value of the Argentine peso at a record low.