Economy

Argentina to maintain a slow pace of currency devaluation, says Economy Minister

Argentina's central bank said earlier this month that it would allow a controlled fluctuation of the peso and abandon its current strategy of "uniform daily devaluation"

Martín Guzmán, Argentine Economy Minister. Photo: Juan Mabromata/Pool via REUTERS
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  • Argentina had a “serious problem” with its fiscal deficit due to the coronavirus pandemic;
  • He acknowledged that expectations of a currency devaluation affect the economy.

Argentine Economy Minister Martín Guzmán on Friday pledged to maintain a slow pace of devaluation of the local currency, despite increased pressure on the peso and reduced foreign reserves.

Argentina had a “serious problem” with its fiscal deficit due to the coronavirus pandemic, but the real economy is showing “signs of recovery” and the devaluation of the peso did not reflect the true condition of the country’s macroeconomics, Guzmán said in an interview with Radio con Vos.

READ ALSO: IMF staff to return to Argentina in mid-November to start talks on IMF program

He acknowledged that expectations of a currency devaluation affect the economy, but said exchange rate stabilization cannot be achieved “overnight.”

Argentina’s central bank said earlier this month that it would allow a controlled fluctuation of the peso and abandon its current “uniform daily devaluation” strategy as it seeks to adapt its monetary policy amid increasingly intense economic turbulence.

READ ALSO: Argentina’s GDP will fall 11.8% in 2020 by Covid-19, says Central Bank survey

The difference between the official exchange rate and that quoted in the informal markets of Argentina reached 143% on Thursday, due to the distrust of investors and the strong demand for dollars in the parallel market.

(Translated by LABS)

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