It has also decided to restrict large export companies' access to Argentine peso
in an effort to make them sell dollars.
RISES AFTER CAPITAL CONTROLS Argentina's peso strengthened yesterday after the government imposed capital controls over the weekend to try to prevent the country's latest debt crisis from spiralling.
In Argentina, imports contracted by 6.4 per cent, to levels one-third below recent highs, as the Argentine peso
depreciated by 12.5 per cent against the US dollar (86.7 per cent over the last 4 quarters).
Weakening currency: The Argentine peso
falls by one-third against the dollar, euro, gold and other assets.
Release date- 13082019 - The Argentine Peso
depreciation and negative market reaction to candidate Alberto Fernandez's primary victory on Sunday raises near to medium-term refinancing risk for the country's electric utilities and increases the possibility of pesification of contract rates, says Fitch Ratings.
"We expect a significant sell-off in EXD (hard currency) assets and heavy pressure in ARS (Argentine peso
) with a potential devaluation in coming weeks," they said in a note.
In addition, we expect a reduction in the negative impact of the Argentine peso
as inflation-driven price increases exceed projected devaluation in that country.
Meanwhile in Argentina, revenue dropped significantly due to the devaluation of the Argentine peso
, as well as limited funds available for working capital purposes.
For instance, at the height of the struggles, Argentina faced with stabilising its currency, the IMF extended a loan package of about US$57 billion to them, and approved a daily auction of about US$60 million by the Central Bank to defend the Argentine Peso
Deutsche Bank observed that the US dollar has strengthened against all currencies except the Egyptian pound in the past 12 months, with the biggest losers of the 42 currencies being the Turkish Lira (-31 per cent) and the Argentine Peso
(-55 per cent).
The increase in leverage is due to the sharp currency depreciation of the Argentine peso
against the U.S.
Other emerging market currencies like Argentine peso
, Turkish lira and Indonesian rupiah also took a hit.