Buenos Aires – (dpa)
Published in :
Friday 15 November 2019 – 6:21 PM
| Last updated :
Friday 15 November 2019 – 6:21 PM
Argentine President-elect Alberto Fernandez is preparing to entrust the country’s central bank with trying to boost the economy, which is suffering from a severe crisis through the application of a low exchange rate, Bloomberg News reported Friday, citing sources familiar with this strategy.
Fernandez, who will take office on the tenth of December, has promised voters that he will revive the economy from its slowdown, and he now aims to make the central bank the cornerstone of this strategy, by exploiting the fact that the bank is not legally independent of the government.
According to Bloomberg, the sources said that under the plan, Fernandez would ask the central bank to intervene actively in order to curb the peso currency to avoid revolutions such as those that contributed to causing major trade deficits in the past.
A low-value currency, according to theory, would help bridge the current account deficit, which many economists consider the main reason for the recurring series of Argentina’s financial turmoil.
Projections indicate that the deficit will reach 1.8 percent of GDP this year, after reaching more than 6 percent in the third quarter of 2018.
“The central bank must control the currency market,” said Matthias Colvas, one of Fernandez’s economists.
The real exchange of Argentina, i.e. the value of the peso against a basket of international currencies, is higher than average in the past eight years, indicating an improvement in the country’s ability to compete with its main trading partners.
The sources said that that level is what the next administration wants to keep with this policy.
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