Argentina raises key rate to 40% — in third hike in a week

Buenos Aires (AFP) – Argentina’s central bank hiked its benchmark interest rate to 40 percent on Friday to support the peso after it plunged in value the day before.

The bank had raised its key rate to 33.25 percent on Thursday but it failed to prevent a more than seven percent drop in the national currency.

The peso has lost more than 10 percent of its value over the past month.

It was the third such hike in just over a week as Argentina seeks to prop up the peso in a bid to halt soaring inflation. 

“As well as using the reference interest rate, the Central Bank will continue using all its intervention tools with respect to the foreign exchange market,” a bank statement said. 

The bank had on Thursday raised the rate by 300 base points to 33.25 but it failed to halt the slide, with the currency shedding 7.64 percent. 

On April 27, it had raised the rate to 30.25 percent to take pressure off the peso. 

The Central Bank also ratified an inflation target of 15 percent for 2018 although the IMF has projected it will reach 19 percent and private consulting firms see it reaching 20 percent. 

Appetite for the greenback remains strong in Latin America’s third-largest economy which has a traumatic history of hyperinflation, financial crises and runs on the bank.