(Adds political risk factor, statement from president’s cabinet chief)
By Jorge Otaola
BUENOS AIRES, May 15 (Reuters) - Argentina’s beleaguered peso was jolted 1.21 percent higher to 24.70 per U.S. dollar on Tuesday after the central bank offered to sell up to $5 billion in the spot market, traders said.
The currency had lost 6.6 percent to a record low on Monday, in continued weakness that last week prompted the government to request a “high access stand-by arrangement” from the International Monetary Fund.
The central bank had already sold billions of dollars of its reserves and hiked interest rates to 40 percent as it sought to contain one of the world’s highest inflation rates.
The peso has weakened about 25 percent since the start of the year and has been one of the world’s hardest-hit currencies as investors flee from emerging markets.
The IMF negotiations carry political risks for President Mauricio Macri’s reform agenda. Many Argentines blame IMF-backed policies of the late 1990s for the country’s 2001-2002 economic meltdown. Some opposition politicians and activists have voiced concerns that the deal being drawn up in Washington will require painful fiscal belt tightening.
Macri’s Cabinet Chief Marcos Pena told reporters on Tuesday Argentina, and not the IMF, would dictate the terms of the agreement. He called on the country to work to lower Argentina’s deficit, particularly in the 2019 budget.
The government earlier this month lowered its fiscal deficit goal in 2018 to 2.7 percent of gross domestic product from 3.2 percent previously, in another bid to calm markets.
Argentina reported on Tuesday a primary fiscal deficit of 10.342 billion pesos ($503.5 million) in April, down 44.6 percent from a year earlier.
The Merval stock index rose 3.21 percent.
Reporting by Jorge Otaola, writing by Hugh Bronstein, Dave Sherwood and Caroline Stauffer; Editing by Bernadette Baum