Argentina again in an emergency. The Macri cure and the return on investment are not enough.
Argentina's central bank raised interest rates to 40% in order to curb the falling peso. The cost of borrowing rose by 300 basis points, a record high
When it seemed that the Macri cure had really had an effect, restoring confidence and investment, the storm returned to Buenos Aires.
It is the second rise in a row, the third in a week. Yesterday rates were set at 33,25% only yesterday. They had been raised to 30,25% from 27,25% just seven days ago. Yet another monetary tightening follows unsuccessful attempts to defend the local currency, which $5 billion was spent on last week. The peso collapsed to a low of 22,25 to the dollar. A year ago it was at 15. Only in 2018 the drop was 17%. Thursday the worst day: -8,5%, the worst performance since December 2015.
"The monetary authority has taken these decisions - affirms the Central Bank of Buenos Aires - in order to avoid disruptive behavior in the foreign exchange market and to guarantee a disinflation process and is ready to act again if necessary".
Argentina is therefore unable to find peace, while inflation continues to gallop, fiscal and trade deficits increase and drought weighs on soybean and corn crops. Elements which, together with the fluctuations of the dollar, are displacing the Argentine peso, causing it to fall sharply.
