BUENOS AIRES, May 28 (Reuters) - Argentina’s central bank chief said Wednesday that devaluation of the peso earlier this year has made exporters more competitive and that the country’s foreign reserves would likely be around $28 billion by the end of the year, according to Argentine media reports.
The reports said that in an upbeat speech to businessmen about Latin America’s No. 3 economy, Juan Carlos Fabrega also said the bank would cut interest rates if inflation continued to cool in May.
“If prices are below 2 percent (on the month) we will reduce rates,” Fabrega was quoted as saying.
The inflation rate, one of the world’s highest, spiked to 3.7 percent in January from the month before due to a 20 percent devaluation in the local currency. But it eased to a 1.8 percent monthly increase in April.
Fabrega, a close ally of President Cristina Fernandez, said he had “high hopes” for dollar income from agricultural exports this year due to forecasts for a record soybean harvest.
Argentina is the world’s No. 3 supplier of raw soybeans, and revenue from their export is needed to bolster its dwindling foreign reserves given that the country has been virtually shut out of capital markets since its 2001/02 sovereign debt default.
The country’s dollar reserves fell 30 percent to $30.3 billion during 2013. A drop to $28 billion would represent a 7.6 percent fall this year. (Reporting by Sarah Marsh and Alejandro Lifschitz; Editing by Peter Galloway)