The head of the Argentine central bank says that the financing provided in 2019, the peso increases

BUENOS AIRES (Reuters) – Argentina's central bank governor Luis Caputo said Friday that the government's funding for 2019 was more than enough and that the country's high sovereign debt yields were "exaggerated."

Peso currency fell 0.93% to US $ 37.80, after two consecutive days of gains, as the authorities negotiated changes to the $ 50 billion loan program with the International Monetary Fund, but

The peso dropped 16% last week after President Mauricio Macri announced that the country would request early disbursements of the Stand-By Agreement to ease concerns about the sustainability of its debt.

"There is no doubt that there is excessive exaggeration. This will be corrected faster than the markets believe, "said Caputo at a conference of financial leaders. "The funding will be more than enough for 2019," he said, without giving details about the sources of funding.

The markets have been optimistic in Argentina after the IMF said Thursday that it aims to conclude the ongoing talks in Washington to strengthen the agreement with Argentina as soon as possible. Macri announced earlier this week austerity measures to balance the budget next year.

This is a risk for Macri in a country where many officials have blamed IMF austerity on the 2001-02 economic crisis that plunged millions of people into poverty. Analysts expect the economy to shrink to 1.9% this year, with inflation exceeding 40%.

Last month, the central bank raised its interest rate to 60% to try to stop the peso and calm inflation, which could hurt economic activity. High rates are a factor behind what construction executives expect to see massive layoffs in the coming months.

Caputo described the current rate as "crisis rate" and said it was "not sustainable" in the medium or long term.

Argentine bonds also rose after comments, with over-the-counter bonds rising by an average of 0.6% and country risk, a measure of the rise in Argentine bond yields relative to less risky alternatives.

While the rapid depreciation of the peso makes Argentina's dollar debts more difficult to pay, most economists believe that the risk of default is low.

Economist Mauro Roca said that he expected country risk to continue to decline and that "the risk assessment was and is exaggerated".