Banking - Argentina

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

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

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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.

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.