Argentina's Central Bank (Central Bank Press Office)

Faced with sustained demand for the dollar and downward pressure on the peso, the Central Bank has once again raised benchmark interest rates and sold dollars on the foreign exchange market.

After today’s decision, benchmark rates have been increased by another 300 basis points to 33.25 percent. The hike is the second in a week and is further to the unscheduled increase set out by the BCRA after record sales of foreign reserves and a sliding peso.  Rates on that occasion were raised from 27.25 percent to 30.25 percent.

The most recent official information on the exchange rate puts it at 22.04 pesos to the dollar.

Interest rates on the LEBAC short-term bonds were raised 500 basis points, to 38.25 percent.

The move to raise rates comes after more losses for the peso today against the dollar, with the exchange rate creeping over 22 pesos to the dollar in trading. Yesterday, the peso ended trading at 21.52 pesos to the greenback, losing 3.06 percent compared to the 20.88 mark on Friday.

The BCRA yesterday sold reserves, closing at a total of US $55.998 billion – US $619 million less than the previous mark. In April the BCRA’s foreign reserves shrank by 8 percent, from US $61.548 billion to US $56.617 billion as the monetary authority has sought to prop up the peso.

Last week, just like today, the Central justified its decision with the goal of guaranteeing the process of lowering the inflation rate and it is ready to act again, should it be necessary. The Central Bank will continue using all the tools at its disposal and conduct its monetary policy to reach its intermediate goal of 15 percent [inflation rate] in 2018.