Ramos ruled out a large, one-time devaluation and instead said he expected the government to allow a faster monthly depreciation of the currency, according to today’s report.
President Cristina Fernandez de Kirchner has tightened controls on the exchange rate and forbidden most purchases of foreign currencies in a bid to stem capital outflows, which reached a record $21.5 billion last year. Confidence in the government fell 7 percent in July for a second straight month, according to a poll released on July 27 by the Buenos Aires- based Torcuato Di Tella University.
“The forceful nature of the FX measures adopted by the government and the underperformance of the economy have eroded consumer and business confidence, triggered a run on private sector dollar deposits and added extra pressure on the peso to depreciate,” Ramos said in the report.
South America’s second-biggest economy, which expanded an annual average of 7.8 percent from 2003 to 2011, will probably expand less than 3 percent this year, Ramos said.
The peso has weakened 6 percent this year to 4.5738 per dollar, the biggest drop after the Brazilian real, which fell 8.3 percent in the same period.