Argentina's central bank has performed a series of rapid-fire rate hikes to help stabilize the national currency. The country wants to prevent a repeat of its 2001-2 economic crisis that left its population in poverty.
Following a sudden run on the peso, Argentina's central bank on Friday hiked the country's main interest rate to 40 percent, the third time in a week that the borrowing rate has been increased.
A day earlier, the rate stood at 33.25 percent, while on April 27, it was hiked to 30.25 percent from 27.25 percent.
The peso jumped more than 5 percent against the US dollar following Friday's announcement, having sunk nearly 8 percent the previous day.
The mega-rate hikes are part of the Argentinian government's bid to support the peso, which has lost a quarter of its value over the past year.
Economic crisis averted for now
The measure was broadly cheered by investors as proof the government is serious about preventing a similar crisis to the one Argentina experienced in the early 2000s, when the economy shrank by 28 percent and the country defaulted on its foreign debt.
One research group, Capital Economics, predicted that the high interest rates would likely remain at emergency levels "for a prolonged period.”
The markets also welcomed Friday's announcement of a revised deficit target, to 2.7 percent of gross domestic product (GDP) — previously it was 3.2 percent, and a modified inflation target of 15 percent.
Inflation is currently running at 25.4 percent, and most analysts expect the headline figure to remain closer to 20 percent. Investors say, that with one of the world's highest inflation rates, Argentina is particularly vulnerable to investment losses.