Argentina Central Bank Raises Interest Rate to 133% as Peso Falters

ARGENTINA - BUENOS AIRES. Argentina's central bank raised the country's benchmark interest rate to 133% from 118% on Thursday, it said in a statement, as the South American country battles triple-digit annual inflation.

It came after a last minute decision not to raise the rate to 145% "following a leak," after Reuters reported the higher figure, citing a source close to the bank.

"They changed it," the source said on the condition of anonymity.

The hike follows the rapid freefall of Argentina's peso, with the currency surpassing the psychological barrier of 1,000 pesos per U.S. dollar earlier this week with less than two weeks before a crucial presidential election.

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Monthly inflation, which stood at 12.7% in September, has sapped wages and savings and pushed two out of every five people in Argentina below the poverty line as the country prepares to vote in general elections scheduled for Oct. 22.

Savings have also been hit after the government announced a near-18% devaluation of the peso in mid-August, which coincided with the last bank hike, and saw the rate increase from 97% to 118%.

But some commentators question whether further hikes have come a little too late amid a worsening economic scenario.

"It is no longer useful to raise the rate, expectations have gone away and raising it at this time is not going to contain the flight from pesos to dollars," a national private banking manager said on condition of anonymity.