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Saturday, May 26, 2018

Peso takes fresh hit amid uncertainty

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Argentina's peso plummeted to a new low Monday despite government attempts to curb losses in recent weeks by hiking interest rates and shedding billions in foreign reserves.

Signs that further measures are needed from President Mauricio Macri's center-right government came as the peso fell sharply on opening Monday and closed down 6.23 percent, trading at 25.52 against the dollar.

The new losses come at an ominous moment.On Tuesday, holders of Lebac peso-denominated bonds issued by Argentina's Central Bank are allowed to demand settlement -- sparking a potential $25 billion payout.

 At this rate, an informal International Monetary Fund board meeting scheduled for Friday to discuss a financial aid package can't come soon enough, after Macri last week began negotiations for a loan to stem the currency run.

An IMF spokesman announced the meeting on Monday even as the peso tumbled."This will be an informal meeting as part of our usual process of briefing the Board on negotiations for high access IMF programs," Gerry Rice said in a statement. It means a decision on Buenos Aires' request is unlikely to be made this week.

The amount and terms of the loan will still have to be discussed. Argentina is seeking a high access financing arrangement.

-AFP, Buenos Aires

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