Argentina rules out another devaluation of peso

Reuters

BUENOS AIRES (Reuters) - The Argentine government on Thursday ruled out a second sharp devaluation of the peso this year, rebuffing calls for a weaker currency from employers who say runaway inflation is hurting trade competitiveness.

President Cristina Fernandez's government implemented a shock 20 percent devaluation of the peso in January. The widening gulf between the official rate and the black market rate since Latin America's third-biggest economy defaulted on its debt have fueled expectations of another hefty intervention.

At 2:35 p.m (1335 GMT) the peso traded at 8.3950 per dollar at the central bank-controlled official rate, compared with 13.820 on the black market.

The head of the influential Industrial Union of Argentina, Hector Mendez, said last week the peso should trade at 10 per dollar at the official rate to provide exporters with a cushion against one of the world's highest inflation rates.

"Argentina implemented a major shift in the exchange rate in January and now I hear Mendez asking the same. We're not going to repeat history," said Deputy Economy Minister Emmanuel Alvarez Agis.

The peso has tanked 1.3 percent since Fernandez unveiled plans to skirt U.S. court rulings that prevent Argentina's servicing its debt until the country settles with U.S. hedge funds demanding full payment on their bonds. The currency has fallen 22 percent this year.

Argentina missed a June interest payment after U.S. District Judge Thomas Griesa blocked a coupon payment owed to holders of debt that was restructured after the country's 2002 default on $100 billion in debt.

(Writing by Richard Lough; Editing by Dan Grebler)

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