By Lucila Sigal and Eliana Raszewski
BUENOS AIRES (Reuters) – Argentina’s central bank has announced a major overhaul to the country’s exchange rate policy, unleashing the peso and years-long controls on the currency ahead of an expected $20 billion International Monetary Fund deal.
The central bank announced that it will undo a fixed currency peg from Monday, letting the peso freely fluctuate within a moving band.
Here is what economists have to say about the policy changes and the IMF loan program, the country’s 23rd in a long and complex history between Argentina and the lender.
CLAUDIO LOSER, EX-IMF WESTERN HEMISPHERE DIRECTOR
“I must say I am surprised by the amount of money at Argentina’s disposition starting next week, approximately $20 billion.”
“Eliminating the CEPO (currency controls) is important, though it does not mean everyone can take out their money. What’s more important is that the dollar will fluctuate, there will be fluctuation. People will be very nervous.”
RICARDO DELGADO, ECONOMIST
“This is a devaluation, different from what the government would have wanted ahead of the elections… Lifting the CEPO is striking at this time of global volatility.”
MARTIN REDRADO, ECONOMIST AND FORMER CENTRAL BANK HEAD
“There will be a limit to what the central bank will be able to invest in the upper part of the band. The IMF will surely set a limit that we may or may not be aware of, but that the market will put to the test.”
AGUSTIN ETCHEBARNE, HEAD OF FREEDOM AND PROGRESS FOUNDATION
“Uncertainty will diminish and that’s a positive thing.”
“This will help to strengthen the central bank… That is good news and it will allow inflation to continue decreasing in the mid-term to much lower levels than we currently have.”
JAIME REUSCHE, MOODY’S VP – SENIOR CREDIT OFFICER
“The $20 billion agreement with the IMF is an important anchor that will help Argentina prepare for the next phase of its adjustment, which involves the elimination of the currency controls and capital controls.”
“Argentina’s credit outlook remains positive, although navigating the current global environment in the context of the planned macroeconomic adjustment will be more challenging for the authorities.”
(Reporting by Lucila Sigal and Eliana Raszewski; Edited by Jorge Otaola and Rosalba O’Brien)
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