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LatinNews Regional Monitor: Brazil & Southern Cone - 21 March 2019

In brief: Argentina

* Argentina’s central bank (BCRA) has increased the interest rate of its short-term ‘liquidity notes’ (Leliqs) to 65.4%, the highest interest rate in five months, in its bid to try to stem the depreciation of the Argentine peso against the US dollar. The interest rate increase came as the value of the peso fell to Ar$42/US$1 on 20 March. Following the increase in the Leliq rate, the peso recovered to around Ar$40/US$1. However, the currency market movements suggest that there still is considerable downward pressure on the peso despite BCRA’s efforts to try to stabilise it. This in turn is producing concerns that the sky-high interest rate established by BCRA will continue to undermine domestic economic growth.