Argentine peso plummets most since 2001 as central bank scales back intervention

Thursday, January 23, 2014

The Argentine peso has fallen by nearly 13% to 7.8825 per US dollar in the past two days, according to a Bloomberg report, marking the biggest fall in the currency for 12 years as the central bank (BCRA) scaled back its intervention.

With international reserves falling below US$30bn last week to a seven-year low and with potential debt and court settlements for Argentina potentially amounting to US$43bn on some estimates, the BCRA's pockets are in effect empty, rendering it helpless to intervene in currency markets.

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Argentina's presidential cabinet chief Jorge Capitanich was quoted in the local press as saying that the fall "was not induced by the state," following a meeting on Wednesday (Jan 22) by the BCRA in which it decided not to intervene in the currency market.