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Argentina Raises Rates to 40% After Peso Selloff Prompts Third Abrupt Increase

  • Investors seeking more fiscal tightening, coordinated response
  • Central bank has boosted rates three times to 40% in a week
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Argentina, Brazil Have 'Great Potential,' Says Templeton's Hasenstab

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Argentina stepped up the fight against the collapse of its currency with a third interest rate increase in one week and the announcement of tighter government spending targets.

In another surprise move, the central bank on Friday raised the key interest rate by an additional 675 basis points to 40 percent - the highest among major economies -- as the Treasury Ministry committed to reducing spending on infrastructure, and to target the country’s primary fiscal deficit at 2.7 percent of GDP, down from 3.2 percent this year.