The Central Bank of Argentina will allow a faster and more volatile depreciation of its tightly-controlled peso, in its latest attempt to contain a hemorrhage of foreign reserves and black market trading. It announced that it was raising interest/repo rates from 19% up to 24% to encourage Argentines to save and invest in pesos. Announced in September, Argentines seeking to purchase dollars for savings were required to pay a 35% tax on top of the previous 30% solidarity tax, with a $200 monthly limit, based on new rules by the Federal Administration of Public Revenues (AFIP). With such high restrictions on buying dollars at the official rate, many are turning to the black market to buy greenbacks. According to research by UsefulTulips, about $3 million a week is being traded in Argentina on peer-to-peer (P2P) exchanges like Paxful and LocalBitcoins. The official exchange is about 77 pesos per dollar on central bank websites, but on the streets it can be as high as 164 pesos per dollar, a difference of 112%. Not since 1989, when the gap hit 215%, has Argentina seen such a sizable difference between its official and unofficial exchange rates. So far, the central bank’s goal of “adding more volatility” to the currency market (i.e. quicken the pace of devaluation) has backfired. Total treasury reserves in Argentina fell by $370 million in a single day on Wednesday to $41.4 billion, the lowest level since January 2017. Their effort is unlikely to significantly change a situation where investors reject the peso due to Argentina’s high inflation rate—above 40% in annual terms—and lack of economic policy credibility. The central bank’s monetary policy and currency controls will likely be the focal point in the government’s attempt to refinance their $44 billion loan with the International Monetary Fund (IMF). Argentina’s economy is set to contract by 11.8% in 2020, up 9.8% from the second quarter to the third quarter of 2020, signaling a recovery from the coronavirus pandemic.