Argentina hikes interest rates after peso plunge
Argentina has hiked interest rates to 60 per cent today after the value of the peso plunged to a record low.
The 15 per cent increase follows an urgent call from the government for the early release of at $50bn (£38.5bn) credit line from the International Monetary fund after the currency toppled on Wednesday amid a worsening financial crisis and a wider struggle for emerging market currencies.
The news comes as Turkey's central bank deputy governor Erkan Kilimci quit ahead of a crucial decision on interest rates in two weeks, according to the Financial Times.
Read more: Argentina calls for early release of $50bn IMF support as crisis deepens
Kilimci's resignation follows a four day long decline in value of the lira, which currently stands at 6.74 to the US dollar, that has spread to other emerging market currencies including the South African rand and the Indian rupee.
The latest drop means the lira has lost almost 11 per cent of its value this week, with today's dive attributed to more investors selling off the currency following the end of the Eid al-Adha Islamic holiday.
Kilimci's replacement will be selected by Turkish president Recep Yayyip Erdogan who has pressured the bank not to increase interest rates despite the weakening of the currency.
Erdogan's monetary policy has been blamed for exacerbating the problems, and critics claim he has too much influence over the central bank.
"It is a little bit too early to speculate over whether news of one of the Central Bank Deputy Governors stepping down from his role could be linked to ongoing fears over central bank independence, but investors are wasting no time in pricing into the Lira that this news is no coincidence," commented FXTM global head of currencies Jameel Ahmed.
"President Erdogan has been so outspoken towards interest rate policy in Turkey that investors have become terrified towards holding onto the Lira, and this news will be digested by traders as an indication that the deputy governor who is stepping down does not fulfil the philosophy of a President known as the self-declared enemy of high interest rates"
Read more: Lira continues decline, dragging down other emerging currencies