Argentina likely to devalue ARS up to 35pct

The central bank of Argentina is planning to devalue ARS this week. This will encourage the commodities sellers, and thereby the country will able to increase foreign reserve, which is scared at present. The BCRA is expected to increase deposit rate by 25 bps in order to control capital outflow. The government is started to liberalize capital control.

Moreover, the government is expected to extend a currency swap deal with China. If it is succeeded in doing so, then capital controls will be removed gradually.

 "It looks likely that the central bank will let the official ARS rate devalue by up to 35% to the level where the parallel black market rate is currently tracking. The plan is to then keep the managed floating exchange rate at this new level, with an upper roof of around USD/ARS 15", says Nordea Bank.