The sell-off in the Argentine peso this month gathered pace after the government’s impromptu request to draw down more of its IMF bailout. Rather than soothing market tensions, this reinforced concerns about the government’s ability to service its debts. A dramatic 1,500bp interest rate hike only seemed to provide fleeting relief to the peso. Markets are now are awaiting details of the government’s fiscal plans, which are expected on Monday. If the government fails to deliver a convincing austerity package, the peso will probably slide further and another large interest rate hike would be likely.
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