LatinNews Regional Monitor: Brazil & Southern Cone - 22 August 2018

Argentina: International investment bank BNP Paribas has warned about the current weakness of the Argentine peso and advised its clients not to hold the currency. In a weekly analysis report produced by the bank’s Brazilian subsidiary, BNP Paribas economists warn that the level of international reserves held by Argentina’s central bank (BCRA) is reaching “alarming low levels” as a result of the efforts to prop up the peso following the run on the currency in May-June. Noting that since then the peso has continued to devalue, forcing BCRA to further intervene in the currency market, the report adds that the expectation is that the peso will remain weak this year and next year and that the BCRA may start to “run out of US dollars to defend the peso”. The report points out that while Argentina has signed a new Stand-By Agreement (SBA) with the International Monetary Fund (IMF) that has given it a US$50bn credit line, if this is credit line is discounted the BCRA has “less than US$20bn liquid and net reserves”.

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