After a run against the peso and a yearly inflation that well surpassed 100%, the Central Bank’s board raised the benchmark interest rate by 1000 basis points today. It is the highest rate since 2002, when the country was suffering a major socio-economic crisis after the government abandoned the “one peso-one dollar” conversion rate of the 1990s.

The measure means that the yearly nominal rate for 28-day Liquidity Bills —the rate the Central Bank lends money to financial entities— is now 91%, whereas the effective interest rate is 141%.

In moments of high inflation and uncertainty, Argentines buy dollars to uphold the purchasing power of their income and savings. By raising the interest rate, the Central Bank is attempting to make investments in Argentine pesos more attractive and discourage buying dollars.

With that in mind, the Central Bank also raised the yearly effective interest rate for fixed-term deposits for individuals up to AR$30 million to 140.5% in order to “boost savings in pesos,” according to an official communiqué. Their 30-day nominal rate is 91%.

The monetary authority also tripled the maximum taxable amount for fixed-term deposits up to AR$30 million.

For the rest of the private sector’s fixed-term deposits, the minimum nominal interest rate is 85.5%, meaning that the effective rate is 128.5%.

The last time the Central Bank had raised interest rates was last week, when it did so by 300 basis points, from a yearly 78% nominal rate to 81%.

Today’s decision to raise the rates was based on the goals of “striving for positive real returns on local currency investments” and “acting to preserve monetary and financial stability,” according to the official press release. While inflation was projected to be 60% as per the national budget, the new rates —which more than double that figure— indicate that the government has long abandoned those forecasts.

At any rate, the hike came two days after the informal dollar price reached almost AR$500, a historic record-high, and the currency exchange gap surpassed 120%. One of the main reasons for the exchange rate shock is the historical drought that is expected to slash between US$18.5 and US$20 billion in agricultural exports this year, according to different calculations.

In today’s communiqué, the Central Bank said it would continue to monitor prices and the financial, foreign currency and monetary aggregate markets to “calibrate its monetary policy.”