Tags: Argentina | currency | peso | foreign exchange

Argentine Peso Slides as Officials Say Currency Is Under Attack

Wednesday, 27 Aug 2014 12:15 PM

Argentina’s peso slumped to a record low, deepening its slide since last month’s default to 2.4 percent and prompting government officials to say holdout creditors are behind a speculative attack on the currency.

The peso slid 0.1 percent as of 12:46 p.m. in Buenos Aires to a record 8.4077 pesos per dollar in the official market, which is controlled by the central bank. Yesterday, the peso weakened 1.6 percent to a record-low 14.2 pesos per dollar in the illegal black market, where savers go to skirt currency controls.

The holdouts “are acting through financial groups to generate negative expectations with speculative attacks against the currency,” Cabinet Chief Jorge Capitanich said Wednesday. “They’re generating an artificial crisis where there is none.”

Argentina defaulted last month after a U.S. judge blocked payment on the country’s international bonds because President Cristina Fernandez de Kirchner refused to also pay holdout creditors led by Elliott Management Corp. The country was ordered to pay the holdouts about $1.5 billion on bonds left over from an earlier default in 2001.

The government said Aug. 19 it’s planning to skirt the ruling by paying international bonds locally. The peso weakened last week at the fastest rate since January, when the government devalued the currency 19 percent.

“The vulture funds’ plan is to attack the currency,” Economy Minister Axel Kicillof said in a separate appearance later today. “They threatened with a huge devaluation of the currency if they don’t get paid.”

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