Following seven straight days of declines in Argentina's peso, President Mauricio Macri decided to make a rare address to the nation on Wednesday to reassure markets that the South American country had no trouble paying its debts.
Efforts by the Argentinian central bank to stabilize the national currency by raising a key interest rate to 60 percent have done little to soothe rapidly deteriorating sentiment in Latin America's third-largest economy.
Argentina's President Mauricio Macri said Wednesday that the International Monetary Fund has agreed to accelerate funding in support of his government's austerity program, but his comments did little to calm the market as the country's currency came under renewed pressure. In volatile trading yesterday, ... The peso is down 49 percent this year.
The "more adverse worldwide market conditions" battering Argentina's economy "had not been fully anticipated", she admitted in a statement.
August has also been the month for a selloff of emerging markets, prompted by the fall in the Turkish lira.
Argentina's peso began to recover on Friday (Aug 31) as markets opened, making a tiny 0.68 per cent gain after losing 20 per cent of its value against the dollar over the previous two days.More news: Deal close on 4-player trade with Suns, Rockets
It has lost more than 45.3 percent of its value against the greenback so far in 2018, prompting massive central bank interventions, including the sale of $500 million in reserves so far this week.
Macri said in a televised address that Argentina has agreed with the IMF "to advance all necessary funds to guarantee compliance with next year's financial program". Austerity measures have been unpopular with many Argentines, who blame budget cuts imposed by the International Monetary Fund for exacerbating the effects of a 2001-02 economic crisis that plunged millions into poverty. His government has since announced more than $2 billion in budget savings, a process he promised to continue.
"We are the country that has the most times violated its global contracts in the world, which has lied and cheated the rest of the time, and has shown again and again - until now - that it is not willing to seek fiscal balance and depend on its own resources", he said.
The IMF stated that the loan would help revise the Argentinian government's economic plan. It pared some of its declines following the central bank announcement.
The bank against raised its benchmark rate on Thursday, lifting it to 60 percent, after a special meeting of its monetary policy committee. Articles appear on euronews.com for a limited time.