(Adds peso closing and details on Leliq auction)
BUENOS AIRES, Oct 12 (Reuters) – Argentina’s peso changed course to close weaker on Friday after the central bank auctioned a round of Leliq notes with slightly lower interest rates than the previous day’s auction, traders said.
The peso closed 0.38 percent weaker at 36.79 per U.S. dollar after hitting a mid-morning high at 36.05.
Argentina’s central bank sold 103.3 billion pesos ($2.85 billion) in seven-day Leliq Treasury notes at an average interest rate of 71.997 percent, traders said.
That rate was lower than Thursday’s auction, in which the central bank sold Leliqs at an annual interest rate of 72.728 percent.
The peso ended the week with a gain of 3.02 percent, despite Friday’s dip.
The gains came after a revised standby financing agreement with the International Monetary Fund announced in September upped the country’s credit line to $57 billion from $50 billion.
The short-term debt auctions are intended to sop up liquidity in the peso spot market that would otherwise be used to buy safe-haven U.S. dollars, despite controversy over its sustainability as a long-term strategy.
Argentina’s central bank has said its main priority is to reduce inflation, which is expected to surpass 44 percent by years end, according to the latest central bank poll.
Argentina is struggling to stabilize its economy, which has suffered a series of setbacks after a bad drought sapped the grain export sector early in the year, and a run on the peso led the country to turn to the IMF to assuage investor fears over whether it could service its international debts in 2019. (Reporting by Jorge Otaola Writing by Cassandra Garrison Editing by Phil Berlowitz)