BCRA Seen Holding Argentine Peso at ARP3.20

Following a strong depreciation of the Argentine peso, from ARP3.10 to the dollar last Thursday to ARP3.18 yesterday, the central bank is believed to have intervened in the FX market to keep the currency from depreciating further. Going forward, “the central bank is expected to intervene to prevent the ARS from weakening beyond ARP3.20,” says Goldman Sachs. “A weaker peso in the near term would exacerbate inflationary pressures and weaken domestic sentiment ahead of the presidential election,” adds Credit Suisse. This supports further sales of dollars by the BCRA in the near future.