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Argentina's Guzman says country has needed instruments to maintain FX policy

Credit: REUTERS/AGUSTIN MARCARIAN

Argentine Economy Minister Martin Guzman said on Friday the country has the necessary instruments to maintain the current exchange rate policy, despite tumbling foreign reserves and a ballooning gap between the official and informal peso exchange rates.

Adds Guzman quote background

BUENOS AIRES, Oct 16 (Reuters) - Argentine Economy Minister Martin Guzman said on Friday the country has the necessary instruments to maintain the current exchange rate policy, despite tumbling foreign reserves and a ballooning gap between the official and informal peso exchange rates.

Guzman, speaking at a business development conference, said the official exchange rate "represents the Argentine reality on the commercial front."

This month, Argentina's central bank adopted a managed float of the peso currency, doing away with its current "uniform daily devaluation" strategy. The black market peso, meanwhile, has kept weakening as confidence dwindled, hitting a historic low of 175 per U.S. dollar on Friday, a gap of more than 125% with the official rate.

"Expectations have been generated that explain this gap but they do not represent the Argentine reality," Guzman said in an interview for local business development group IDEA.

Guzman also said that the crisis-stricken South American country must converge towards a fiscal balance.

The government is working towards a fiscal deficit of 4.5% of gross domestic product in 2021 and an economic rebound of 5.5%, according to a draft budget.

(Reporting by Eliana Raszewski; writing by Cassandra Garrison; Editing by David Gregorio)

((Cassandra.Garrison@thomsonreuters.com; +54 11 5830 7443;))

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