BUENOS AIRES (Reuters) - Argentina’s peso opened weaker on Wednesday as investors awaited details of a revised lending agreement with the International Monetary Fund (IMF) amid speculation over whether the central bank would intervene less to support the currency, a day after the central bank governor resigned.
The peso ARS=RASL slipped 0.26 percent in thin early trade to 38.60 to the dollar as investors waited for hints of the direction of monetary policy under the new central bank governor, Guido Sandleris, who was appointed on Tuesday after his predecessor, Luis Caputo, unexpectedly resigned.
Economy Minister Nicolas Dujovne said on Tuesday in New York, where he is attending the United Nations General Assembly, that details of the revised IMF deal were being finalized and should be announced on Wednesday.
The central bank shakeup on Tuesday sent the peso sliding and shook investor confidence, as nationwide strikes protesting runaway inflation shut down public transit and ports across the country.
In a statement, Sandleris said that the “main objective of the central bank is to reduce inflation,” which is expected to top 40 percent in 2018. He added that the bank would “work to recover the stability and predictability of prices.”
After meeting with Argentine President Mauricio Macri in New York on Tuesday, IMF Managing Director Christine Lagarde said the Fund was “close to the finishing line” in reaching a new deal with Argentina.
Details of how the bank is expected to control rising consumer prices have not been made public, although traders speculate that an exchange rate band policy would be included in the revised IMF deal, which would allow the currency to fluctuate within a predetermined range.
“Traders are waiting to see if the new head of the central bank will continue with market interventions or adopt a freer flotation, more in line with the vision of the IMF,” said Gustavo Ber of consultancy Estudio Ber.
The central bank has auctioned nearly $16 billion in reserves this year to prop up the peso, which has lost about 50 percent of its value against the dollar.
Reporting by Jorge Otaola and Walter Bianchi; Writing by Scott Squires; Editing by Daniel Flynn and Jeffrey Benkoe