BUENOS AIRES Feb 6 Argentina's peso, which
devalued sharply two weeks ago, rose for the second straight day
on Thursday after a rule change by the central bank boosted the
dollar supply in the greenback-starved local market.
The peso closed up 0.32 percent at 7.87/7.88 to
the U.S. dollar, after rising 1.3 percent on Wednesday. On the
parallel black market it recovered 0.97 percent to
Argentina's currency has steadied at around 8 pesos to the
dollar since late January when it fell 12 percent in a day,
kindling fears of an economic crisis in South America's No.3
economy just as jitters hit global emerging markets.
Analysts surveyed in a Reuters poll this week expected it to
weaken to 8.2 to the dollar within a month, and 10.70 by the end
of the year.
The new central bank rule published on Wednesday states that
the net foreign currency position of local banks cannot be more
than 30 percent of the bank's worth. That will push dollars into
the spot market and give a mild boost to flagging reserves,
"International reserves should increase if the central bank
purchases the U.S. dollars sold by the banks, but likely only
modestly, as most of those dollars were already deposited at the
central bank," said analysts at BNP Paribas on Thursday.
Argentina's reserves have been gradually dribbling away -
down over 30 percent last year - as the government fights to
defend the exchange rate. This week they slipped below $28
billion, standing at $27.85 billion as of Wednesday evening.
Late Thursday, Cabinet Chief Jorge Capitanich tweeted after
a meeting with cereal firm representatives that the industry had
promised to liquidate $2 billion into the local market in
Farmers have been hoarding soy beans in Argentina, the
world's No.3 exporter, to protect themselves from the peso's
slide, but as harvesting begins will be forced to sell to pay
Stronger-than-expected U.S. economic data boosted currencies
throughout emerging markets on Thursday.