Argentina’s Currency Outlook

By Karin Strohecker

Washington (Reuters) – Argentina’s Deputy Central Bank Governor Vladimir Werning expressed on Wednesday that he anticipates the peso currency will reach the lower end of its newly established trading band.

> “(In) all successful emerging market stabilization programs, at the end of the day, you have a stronger currency,” stated Werning during a conference of the Institute of International Finance, held alongside the IMF/World Bank Spring meetings in Washington.

Earlier this month, Argentina shifted from a crawling peg to the U.S. dollar in favor of a continuously widening trading band.

> “For us, it’s a very good process, and we expect the currency to hit the lower band,” noted Werning.

He pointed out the intriguing monetary policy challenges this posed, and assured that the central bank is prepared to buy up any excess dollars that strengthen the local currency, subsequently issuing pesos in exchange.

Werning also mentioned that the spreads on Argentina’s debt—meaning the premium investors require to hold its bonds—are decreasing. However, he indicated that the government is not in a hurry to enter the capital markets.

> “At reasonable spread levels,” he remarked, the country could “roll-over debt, which would ease some ongoing pressure. But we’re not in a rush to go to market.”