Inflation-stricken Argentina to issue higher denomination banknotes

People walk past Argentina's Central Bank in Buenos Aires' financial district, Argentina, December 16, 2015. REUTERS/Marcos Brindicci

BUENOS AIRES (Reuters) - Argentina’s Central Bank said on Friday it would issue higher denomination banknotes this year and next, in the face of double-digit inflation that has gnawed away at the value of the local currency.

The largest bank note in Latin America’s third biggest economy is the 100 peso bill, currently worth $7.4 U.S. dollars. Cash machines often run out of money over long weekends because they cannot contain enough bills to satisfy demand.

From mid-year, the Central Bank will start circulating 200 peso and 500 peso bank notes, and next year will introduce the 1,000 peso note.

“The incorporation of bills of higher denomination is a practical necessity for the better functioning of cash machines and the reduction of the cost of moving cash around,” the bank said in a statement.

Reducing inflation is one of the main challenges for Argentina’s new center-right government, which took office last December promising to reduce imbalances in the economy and kick-start growth.

The Finance Ministry had said it wants to bring inflation down to between 20 and 25 percent this year from around 28 percent last year. It aims to bring inflation down to 5 percent in 2019.

The Central Bank said the new banknotes would be printed with images of the country’s indigenous animals.

Reporting by Sarah Marsh and Maximilian Heath; Editing by Mary Milliken