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IMF voices support for Argentina

September 01, 2018

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BUENOS AIRES: Argentina’s beleaguered peso stabilised on Friday as the central bank said it would auction a large amount of dollar reserves and the International Monetary Fund issued a strong statement of support for President Mauricio Macri’s government.

With frustration rising over inflation of more than 30 per cent and austerity measures required under a $50bn IMF standby deal, members of the opposition Citizens’ Unity party called for protests against Macri across the country on Friday evening.

The party’s populist leader, former President Cristina Fernandez, may run against Macri for president next year, despite a graft scandal that has marked by the jailing of several of her former officials, further eroding confidence in the country’s economy, Latin America’s third largest.

Macri is caught between voters tired of fiscal belt-tightening measures already implemented and investor pressure to unveil a package of further spending cuts austere enough to calm the markets.

Many Argentines blame the IMF for imposing budget cuts that plunged millions into poverty during 2001-02 economic crisis.

The peso strengthened 3.5pc in early Friday trade to 37.80 to the dollar after the central bank said it would auction $675 million in foreign reserves. It remains the world’s worst performing currency so far this year.

“The peso is recovering thanks to the central bank actions,” said Gustavo Quintana, a trader at local brokerage PR Corredores de Cambio.

The bank had offered $500m per day over recent sessions.

Published in Dawn, September 1st, 2018