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By: Patrick Gillespie and Carolina Millan
Argentina’s central bank stepped back from defending the peso Friday following the country’s record deal Thursday with the International Monetary Fund.
The peso dropped 1.3 percent to 25.31 per dollar Friday from 24.9850 per dollar Thursday. The currency paired earlier losses Friday, after being down as much as 2.2 percent.
Still, the decline marks the end of three weeks of central bank interventions in currency markets to stabilize the volatile peso. Since May 14, the bank had offered to sell $5 billion at 25 pesos per dollar. That offer, which was never executed, kept the peso steady amid IMF talks.
The IMF approved a $50 billion credit line to Argentina on Thursday, the largest lifeline in the Fund’s history. In exchange, Argentina agreed to cut its fiscal spending faster, give the central bank more independence and change its inflation targets. Argentine leaders sought out the IMF following a sharp selloff in the peso in May as global volatility and concern about the central bank’s credibility boiled over.
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