June 14, 2016 / 11:22 PM / 2 years ago

Argentina central bank issues local bonds, lowers yields

BUENOS AIRES, June 14 (Reuters) - The Argentine central bank issued nearly $5 billion of short- and medium-term bonds on Tuesday, and lowered interest rates by a full percentage point as it tries to block speculative capital from driving up inflation.

The so-called Lebac bonds are down to a 35-day yield of 32.25 percent, similar to a fall recorded last week. The rates were lowered in order to “not accentuate contractionary monetary policy bias,” the bank said in a statement.

The central bank has been lowering rates on the bonds for the past six weeks as part of its efforts to push back against a tide of short-term foreign investment, also known as hot money or speculative capital, driven by confidence in center-right President Mauricio Macri’s reforms.

The bank now decides before each weekly auction which Lebac maturities will be open to investors settling through Euroclear, one of the biggest stock and bond settlement houses, and which can only be settled onshore.

The government on Wednesday will present its first monthly inflation data since Macri closed the statistics agency in December to revamp its methodology. (Reporting by Walter Bianchi; Writing by Caroline Stauffer; editing by Diane Craft)

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