Argentine minister seeks to reassure amid currency crisis

Argentine Finance Minister Nicolas Dujovne said he understood the turbulence of the last few days concerned investors in Latin America's third-largest economy

Buenos Aires (AFP) – Argentina’s Economy Minister Nicolas Dujovne sought to reassure markets on Friday after the peso plunged more than 6.0 percent against the dollar the day before, leaving it at a record low.

Dujovne told reporters he understood the turbulence of the last few days concerned investors in Latin America’s third-largest economy.

“We are working to normalize the exchange market and smooth the fluctuations we have seen in the last few days, always based on the currency floatation program,” he said.

“Even in this program it is possible to have a currency scheme with soft fluctuations and we think that we are on the way to being able to put it into practice.”

Dujovne was speaking after the government replaced Central Bank governor Federico Sturzenegger late Thursday as the run on the peso gained pace.

The reshuffle was announced after Dujovne held a crisis meeting with Argentina’s center-right President Mauricio Macri.

His replacement, finance minister Luis Caputo, will be tasked with laying out a path ahead amid investor complaints of an incoherent strategy.

The Argentine currency has dropped 30 percent against the dollar after a currency crisis in April and May, followed by a 8.6 percent drop this week.

Last week, the IMF announced a 50 billion dollar (43 billion euro) standby loan as Latin America’s third largest economy sought help to stabilize its economy and currency exchange market.

“The liquidity that we will be pouring into the market in the coming weeks will contribute to significantly reduce those turbulences that we have seen in the foreign exchange market,” Dujovne told reporters in Buenos Aires.

Once the loan is approved by the IMF board on Wednesday, he said that Argentina will receive 7.5 billion dollars of the 15 million allotted for budget support.

“The other 7.5 billion dollars will go to strengthen the reserves of the Central Bank,” he said.

“We are working with Caputo in a program to strengthen the Central Bank’s roadmap by replacing the Central Bank’s bills that have very high rates and short-term maturity with longer-term treasury bills, a process that will be gradually carried out,” he added.