Argentina peso plunges 11.1%

The Argentine peso plunged 11.1 percent against the US dollar Thursday, the sharpest one-day fall since 2002 as the central bank appeared to stop trying to defend the currency amid mounting capital flight. The peso fell to 8.01 to the US dollar from 7.1, and followed Wednesday's 3.2 percent loss. That took the currency's depreciation so far this year to nearly 19 percent, creating deeper challenges for the government wrestling with falling foreign reserves and mounting inflation. The Central Bank of Argentina stayed out of the market again Thursday, after having spent about $120 million to defend the currency on Tuesday. The central bank had rigidly enforced an official exchange rate over the past 10 years, but the peso has slid steadily since last year. Meanwhile, the country's foreign exchange reserves have plummeted, down from $52 billion in 2011 to $29 billion now. The bank has tried to stanch currency flight in the face of surging inflation that, according to private sector estimates, rose to 28.4 percent last year. "What we are seeing is a change in strategy which aims to dramatically accelerate the devaluation, in more of a 'shock' style rather than gradually," said  Abeceb.com analyst Juan Pablo Rondero. On Wednesday, the government announced tighter controls on shopping abroad via the Internet to prevent more outflow of dollars from the country. It said Argentines could only make two purchases a year worth no more than $25 each, otherwise they will be taxed at a 50 percent rate.