Argen-tina's peso rallied for a third straight day on Wednesday, after high-interest short-term debt issued by the central bank soaked up liquidity, a strategy that has raised concern about the sustainability of the country's program.
Argentina's central bank issued 7-day short-term debt, known as Leliq, at interest rates nearing 70 percent in an effort to sop up excess pesos in the foreign exchange market that might otherwise gravitate toward safe-haven US dollars. The bank says regular Leliq auctions are part of its anti-inflation plan. While that has helped the peso strengthen against the dollar, the high interest rates are unsustainable in the medium term, according to economist Gustavo Ber at consultancy Estudio Ber.
The Argentine peso was 1.06 percent stronger at 37.75 per US dollar 14:15 local time (1700 GMT), bringing this week's gains to 9.04 percent.
Under new leadership after the latest central bank chief quit last week, the monetary authority has said its main priority is controlling inflation, in part by implementing a peso trading band and not allowing peso liquidity to increase. Inflation in Argentina is expected to top 44 percent by year's end, according to the latest central bank poll.
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