Global Macro Service > Research Briefings > Argentina

Monetary and FX policies to keep the peso in check

Argentina’s central bank introduced changes to its monetary policy framework last week, including cutting banks’ reserve requirements to meet higher demand for money in July. The BCRA aims to preserve calmer exchange-rate market conditions and will tighten its monetary base target from August to October to provide support to the local currency against the increased currency in circulation in the economy.

The BCRA also lowered the policy rate floor to 58%. This enables the central bank to keep financial conditions tight, but it nevertheless allows for a slight decrease in real interest rates. The FX interventions scheme was left unchanged as the BCRA may need to intervene in the FX market ahead of the elections.

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