Argentina is said to seek more FX control before IMF review

Argentina agreed to the three-year, US$56 billion stand-by deal with the IMF last year to help shore up its finances. (AFP pic)

BUENOS AIRES: Argentina’s central bank has told the International Monetary Fund it wants to intervene more heavily in the currency futures market, just days before the fund’s board meets to consider the latest disbursement of a record US$56 billion credit line.

The bank has asked for greater capacity to operate in futures because that’d help it keep the peso in check before presidential elections on Oct 27, when Argentines may rush to buy dollars, according to three people with direct knowledge of the matter. The central bank’s press department declined to comment. An IMF spokesman declined to comment.

Trading futures has been a key tool for the central bank to manage the peso in recent weeks. The current agreement with the IMF allows the central bank to have a short futures position of US$1.6 billion in July, US$1.3 billion in August and US$1 billion in September.

On Friday, the IMF said it reached a staff-level agreement with Argentina on its fourth loan review, paving the way for a next disbursement of US$5.4 billion.

“Argentina’s economic policies are yielding results,” IMF Acting Managing Director David Lipton said in an emailed statement. The IMF board is scheduled to consider the latest disbursement on July 12, according to the statement.

Argentina agreed to the three-year, US$56 billion stand-by deal with the IMF last year to help shore up its finances. The IMF said in April that Argentina’s economy is forecast to shrink 1.2% this year, following a 2.5% contraction in 2018.