By: M. S. Salama CAIRO, May 6, 2018 - Argentina's Central Bank on Friday raised its benchmark interest rate to 40 per cent to support the peso, the third such hike in just over a week and one day after the currency plunged in value. Following the decision, the peso -- which has lost more than 10 per cent of its value in the past month -- opened 6 per cent higher against the dollar. Argentina's central bank raised its benchmark interest rate by 300 basis points to 33.2 per cent on Thursday, but the second steep rate increase in less than a week failed to stop the country's peso currency from swooning to a record low. The local currency tumbled 7.83 per cent to 23 per US dollar. It had hit 21.2 to the greenback on Wednesday, the first trading day due to a holiday after the bank hiked the rate to 30.25 per cent from 27.25 per cent on Friday. "Given the dynamics acquired by the foreign exchange market, in which yesterday the peso depreciated against the rest of the currencies of emerging countries, the Monetary Policy Council of the Central Bank of the Argentine Republic and its Directory have decided a series of measures in order to stabilize the market," the Central Bank of Argentina said in a statement on its website. The statement added that in addition to the use of the interest rate, the Banco Central de la República Argentina (BCRA) will continue to operate with all its intervention tools in the foreign exchange market. These transactions may be arranged both in cash and at term. The statement clarified that the monetary authority made these decisions in order to avoid disruptive behavior in the exchange market as well as to guarantee the disinflation process and is ready to act again if necessary. The Central Bank will continue using all the tools at its disposal and will conduct its monetary policy to reach its intermediate target of 15% in 2018, the statement added.
