BUENOS AIRES: Argentina's peso was 2.23 percent weaker on Thursday at 38.55 per dollar, driven lower by expectations that higher US interest rates will push capital away from riskier emerging markets and toward the greenback, local traders said.
The peso had gained 9.58 percent in the previous three days, under a new International Monetary Fund standby financing deal that calls for tough fiscal measures.
Sales of high-interest, short-term debt instruments known as "Leliqs" by Argentina's central bank have also supported the local currency this week by mopping up excess peso liquidity that might otherwise go toward safe-haven US dollars.
The peso was expected to weaken further in the months ahead as skepticism over the government's ability to tame inflation and plug a budget deficit limit the impact of the IMF deal, a Reuters poll showed.
The currency is seen plummeting about 19 percent to 47 to the dollar in 12 months, according to the median of 13 forecasts from currency strategists and economists.
Federal Reserve policymakers signaled that gradual US interest rate hikes will be enough to tame inflation despite a fast-growing economy.
The newly-renegotiated $57 billion IMF pact with Argentina showed solid IMF support for the free-market policies of President Mauricio Macri ahead of his 2019 re-election bid.
Macri, elected in late 2015, has struggled to stabilize Latin America's No. 3 economy after eight years of heavy-handed foreign exchange controls, generous public utility subsidies and high deficits under previous President Cristina Fernandez.
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