BUENOS AIRES Dec 14 Argentina's central bank is
working against the clock to push through a devaluation this
week, a senior bank official said on Monday, although it will
not allow the exchange rate to weaken to more than 15 pesos per
U.S. dollar.
Mauricio Macri, a centre-right advocate of free markets,
took office last week as president, ending 12 years of Peronist
rule. Macri has vowed to open up the economy and reduce state
interventionism, including propping up the peso.
According to the official exchange rate, one U.S. dollar is
worth 9.785 Argentine pesos, whereas on the black market, it is
worth 14.69 pesos. Most of the country's transactions take place
between the official and black market rate.
Macri has said he wants the two rates to converge. His
critics fear that a sharp devaluation of the official rate will
send inflation, which private economists already estimate at
around 25 percent, soaring further.
"We are working hard, we want to bring about change as soon
as possible but without committing errors, and that is why the
implementation (of this policy change) should come this week,"
the official said, noting however that all policy decisions were
still in flux.
"We will keep the managed floating exchange rate with an
upper limit around 15 pesos per dollar."
Local market traders are already factoring in a devaluation
this week.
The official said the bank expected the devaluation to
prompt grains exporters to sell around $3 billion of goods by
the end of the year, resulting in an inflow of dollars.
If a deal in negotiation with Wall Street banks for a credit
line of up to $7 billion also comes off, Argentina should see
its low foreign reserves considerably bolstered, the official
said.
That in turn should enable the government to lift capital
controls, freeing up hard currency for importers and savers.
This will likely happen gradually, however.
The central bank's reserves are currently just below $25
billion, although private analysts estimate net reserves are
just a fraction of the gross figure.
The official added that the bank would also sharply hike its
interest rates from around 26 percent at the moment, in order to
incentivize Argentines to keep their money in pesos rather than
change into dollars.
(Writing by Sarah Marsh; Editing by Bernard Orr)