Amid expectations of a fresh drop in the value of the Argentine peso, whose exchange rate against the dollar hit 45 pesos in April, and with inflation still rampant and reaching 4.7 percent in March, on April 15 the Central Bank (CB) began a process of daily dollar sales. In a bid to control the exchange rate, the CB will auction 60 million dollars a day up to a total of 9.6 billion dollars. If the US currency exceeds the ceiling of the non-intervention zone, it will be able to sell up to an additional 150 million dollars per day.
In addition, CB Governor Guido Sandleris announced two new monetary policy measures on April 16. First, the lower and upper limits of the so-called “non-intervention zone” – below or above which the CB will be able to intervene – will be fixed respectively at 39.75 and 51.45 until the end of the year, as opposed to being raised in steady increments as had been the case. Second, the CB will not purchase foreign currency even if the peso drops below the lower limit of the non-intervention zone until June 30, 2019. Both measures are intended to reinforce the contractionary bias of monetary policy, in addition to other steps aimed at boosting competition in the banking system – for instance, such as by enabling savers to open term deposits in a bank where they do not have an account.
As part of the economic and social measures announced by the Ministry of Finance with the aim of boosting internal consumption, the CB will forbid banks from charging commissions to businesses for making cash deposits and will also speed up their receipt of money from credit card sales.