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LatinNews Daily - 01 October 2018

In brief: Argentina

Analysts interviewed by the Argentine press have said that they expect that the market will “test” the new exchange rate regime that Argentina’s central bank (BCRA) has announced that it will implement from 1 October. As part of the new terms agreed with the International Monetary Fund (IMF) for a Stand-by Agreement (SBA), BCRA agreed to modify its exchange rate regime and introduce currency bands so as to limit its intervention in the local currency market in support of the peso, and to anchor market expectations. BCRA has set a currency band of Ar$34/US41-Ar$44/US$1 in which it says that it will not intervene in support of the peso. However, analysts have told Argentine media that they think that the local market is bound to “test” BCRA’s ability to maintain the exchange rate within its target band this week, with the demand for US dollars set to increase and drive the exchange rate from the Ar$41/US$1 that it was trading at the end of last week towards the top end of the BCRA band. 

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