By Joe Cash

BEIJING (Reuters) - China's imports are expected to have contracted in May, despite a low base last year as a lockdown in Shanghai brought the country's biggest port to a standstill, while exports likely fell for the first time in three months, a Reuters poll showed.

Inbound shipments to the world's second-largest economy were projected to have fallen 8.0% year-on-year, following a drop of 7.9% in April, according to the median forecast of 26 economists in the poll finalised on Monday.

Exports are expected to have shrank 0.4% from a year earlier against growth of 8.5% in April, reflecting weak global demand for Chinese goods and aligning with poor import performance since China brings in parts and materials from abroad to assemble into finished products for export.

China's trade data will be released on Wednesday.

The pessimistic outlook for exports suggests that Chinese exporters have caught up on unfulfilled orders after last year's COVID-19 disruptions and global demand is insufficient to sustain a recovery in outbound shipments.

China's factory activity shrank faster than expected in May on weakening demand, the official manufacturing purchasing managers' index (PMI) showed last Wednesday, but a private sector survey released on Thursday unexpectedly swung to growth.

The official PMI sub indexes for May showed factory output swung to contraction from expansion while new orders, including new exports, fell for a second month.

South Korean shipments to China, a leading indicator of China's imports, slid 20.8% in May, marking the 12th straight annual loss, but the pace eased to the slowest seen in seven months.

China's economy grew faster than expected in the first quarter due to robust services consumption, but factory output has continued to lag amid persistent weak global growth.

Analysts are now downgrading their expectations for the economy with Nomura and Barclays (LON:BARC) both cutting China's 2023 GDP growth forecasts

The government has set a modest GDP growth target of around 5% for this year, after badly missing the 2022 goal.

(Polling by Devayani Sathyan and Sujith Pai; Reporting by Joe Cash; Editing by Jacqueline Wong)

By Kevin Buckland

TOKYO (Reuters) - The dollar firmed against major peers in Asian trading after a robust U.S. jobs report spurred traders to price in higher interest rates for longer.

The Australian dollar erased early losses after a report showed a pick-up in services activity in key trading partner China. The yuan also got a boost.

The Canadian dollar proved resilient, buoyed by a spike in crude oil prices.

The U.S. dollar garnered support from higher Treasury yields after data on Friday showed payrolls in the public and private sector increased by 339,000 in May, far outstripping the 190,000 forecast on average by economists polled by Reuters.

The U.S. currency gained 0.11% to 140.135 yen, as 10-year U.S. Treasury yields climbed more than 3 basis points to 3.727% in Tokyo. The dollar rallied 0.84% against the yen on Friday.

The euro slipped 0.04% to $1.0702, extending the previous session's 0.51% slide.

While headline U.S. jobs growth was much stronger than expected in May, wage pressures eased and the unemployment rate climbed off a 53-year low, potentially giving the Federal Reserve scope to pause their rate hiking campaign at the upcoming June 13-14 meeting, as some officials had voiced a preference for doing last week.

However, those bets simply shifted to July, and traders eased off on bets for rate cuts later in the year.

CME Group's (NASDAQ:CME) FedWatch tool shows interest rate traders are laying 1-in-4 odds for a hike next week, down from 2-in-3 odds a week earlier. For July, markets put 70% odds for rates to be at least a quarter point above where they are currently.

"It's very data-driven, and given that wages are moderating, it would point to a potential pause - but I don't believe they're done," said Bart Wakabayashi, a branch manager at State Street (NYSE:STT) in Tokyo.

"The dollar overall is going to remain well supported."

Wakabayashi expects the dollar to push up to 142.50 yen, and a clear break of that would open the way to 145.

"If there are any dips, there are going to be people looking to buy dollar-yen," he said.

The Aussie was flat at $0.6605, recovering from early losses of as much as 0.25%, aided by more evidence of China's recovery from the pandemic. The private-sector Caixin/S&P Global services purchasing managers' index (PMI) rose to 57.1 in May from 56.4 in April - contrasting with the official PMI released last week that showed a slower pace of expansion.

The yuan edged up, reversing an earlier decline. The U.S. dollar was 0.03% lower at 7.1074 yuan in offshore trading, after earlier gaining 0.15%. It reached a six-month high at 7.1404 on Thursday.

The Canadian dollar was also firm, amid a more than 1% rise in crude prices after Saudi Arabia announced its biggest production cut in years. The greenback slipped 0.06% to C$1.34265, approaching Friday's two-week low of C$1.3408.

Dollar edges up as US rates seen higher for longer

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Investing.com -- The economic calendar is light in the coming week but rate decisions in Canada and Australia will be in the spotlight in the run-up to the Federal Reserve’s keenly anticipated announcement on June 14. Investors remain cautious despite a rally in tech stocks and market watchers will get an update on the outlook for the global economy. Here’s what you need to know to start your week.

U.S. data

With the Fed entering its traditional blackout period ahead of its June 13- 14 meeting there will be no officials discussing the monetary policy outlook.

Friday’s mixed U.S. employment report showed job growth accelerating in May but also indicated that wage gains are moderating. An increase in the unemployment rate added to the view that conditions in the labor market are easing.

The jobs data underlined expectations for the Fed to pause hiking rates at its upcoming meeting. It would be the first halt since the Fed started its aggressive anti-inflation policy tightening more than a year ago.

The ISM services PMI is out on Monday and is expected to point to a still solid rate of expansion, in contrast with the manufacturing PMI which contracted for a seventh straight month in May.

Other reports include Wednesday’s trade figures and Thursday’s initial jobless claims numbers.

Stock market gains

Some investors are becoming increasingly wary about how much market gains have come to be dominated by the out-performance of a small handful of megacap stocks while the rest of the market treads water.

The tech-heavy Nasdaq 100 has gained 33% so far in 2023 and the benchmark S&P 500 has risen 11.5% year to date, currently standing at a 10-month high.

The combined weight of five stocks - Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Google-parent Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN) and Nvidia (NASDAQ:NVDA) - now accounts for 25% of the S&P 500’s market value, with the buzz around advances in artificial intelligence fuelling hopes for significant future gains.

A rally concentrated in a handful of stocks raises questions about the health of the broader market and risks igniting volatility if investors ditch those megacap holdings.

Central bank decisions

Ahead of the Fed’s upcoming meeting the Reserve Bank of Australia and the Bank of Canada will both hold policy meetings this week, as officials in both countries grapple with still persistent inflation.

Tuesday’s RBA decision could go either way after April inflation data rose much more strongly than expected.

Rates are already at an 11-year peak after a surprise hike last month, with RBA governor Philip Lowe saying he wanted to send a clear message that the central bank will do whatever it takes to win the inflation fight.

Meanwhile, markets expect the BOC to deliver a hawkish hold - indicating that they could raise rates again in July unless there is evidence of cooling inflation.

Eurozone

In the Eurozone, data on Monday will show how the German economy performed at the start of the second quarter, with data on trade, factory orders and industrial production due out after data last week showing that the bloc’s largest economy slid into recession in the first quarter.

The European Central Bank is to publish the results of its consumer expectation survey on Tuesday which will show whether inflation expectations are becoming more entrenched.

ECB President Christine Lagarde is to testify before the Committee on Economic and Monetary Affairs of the European Parliament on Monday and her comments will be closely watched.

Other ECB officials due to make appearances before the central bank enters its quiet period on Thursday ahead of its June 15 meeting include board members Luis de Guindos and Fabio Panetta.

World Bank and OECD global economic forecasts

Investors will get an update on the outlook for the global economy when the World Bank releases its latest projections for global growth on Tuesday, followed a day later by OECD with its own forecasts.

Last month the World Bank warned of a slow-growth crisis in the global economy that could persist over the coming decade amid financial sector turmoil, high inflation, the ongoing effects of Russia’s invasion of Ukraine, and three years of COVID-19.

Meanwhile, OECD raised its forecasts for global growth back in March saying it expects global growth to reach 2.6% this year and 2.9% in 2024 but warned that the outlook remains fragile, and risks remained tilted to the downside.

--Reuters contributed to this reportInvesting.com -- The economic calendar is light in the coming week but rate decisions in Canada and Australia will be in the spotlight in the run-up to the Federal Reserve’s keenly anticipated announcement on June 14. Investors remain cautious despite a rally in tech stocks and market watchers will get an update on the outlook for the global economy. Here’s what you need to know to start your week.

U.S. data

With the Fed entering its traditional blackout period ahead of its June 13- 14 meeting there will be no officials discussing the monetary policy outlook.

Friday’s mixed U.S. employment report showed job growth accelerating in May but also indicated that wage gains are moderating. An increase in the unemployment rate added to the view that conditions in the labor market are easing.

The jobs data underlined expectations for the Fed to pause hiking rates at its upcoming meeting. It would be the first halt since the Fed started its aggressive anti-inflation policy tightening more than a year ago.

The ISM services PMI is out on Monday and is expected to point to a still solid rate of expansion, in contrast with the manufacturing PMI which contracted for a seventh straight month in May.

Other reports include Wednesday’s trade figures and Thursday’s initial jobless claims numbers.

Stock market gains

Some investors are becoming increasingly wary about how much market gains have come to be dominated by the out-performance of a small handful of megacap stocks while the rest of the market treads water.

The tech-heavy Nasdaq 100 has gained 33% so far in 2023 and the benchmark S&P 500 has risen 11.5% year to date, currently standing at a 10-month high.

The combined weight of five stocks - Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Google-parent Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN) and Nvidia (NASDAQ:NVDA) - now accounts for 25% of the S&P 500’s market value, with the buzz around advances in artificial intelligence fuelling hopes for significant future gains.

A rally concentrated in a handful of stocks raises questions about the health of the broader market and risks igniting volatility if investors ditch those megacap holdings.

Central bank decisions

Ahead of the Fed’s upcoming meeting the Reserve Bank of Australia and the Bank of Canada will both hold policy meetings this week, as officials in both countries grapple with still persistent inflation.

Tuesday’s RBA decision could go either way after April inflation data rose much more strongly than expected.

Rates are already at an 11-year peak after a surprise hike last month, with RBA governor Philip Lowe saying he wanted to send a clear message that the central bank will do whatever it takes to win the inflation fight.

Meanwhile, markets expect the BOC to deliver a hawkish hold - indicating that they could raise rates again in July unless there is evidence of cooling inflation.

Eurozone

In the Eurozone, data on Monday will show how the German economy performed at the start of the second quarter, with data on trade, factory orders and industrial production due out after data last week showing that the bloc’s largest economy slid into recession in the first quarter.

The European Central Bank is to publish the results of its consumer expectation survey on Tuesday which will show whether inflation expectations are becoming more entrenched.

ECB President Christine Lagarde is to testify before the Committee on Economic and Monetary Affairs of the European Parliament on Monday and her comments will be closely watched.

Other ECB officials due to make appearances before the central bank enters its quiet period on Thursday ahead of its June 15 meeting include board members Luis de Guindos and Fabio Panetta.

World Bank and OECD global economic forecasts

Investors will get an update on the outlook for the global economy when the World Bank releases its latest projections for global growth on Tuesday, followed a day later by OECD with its own forecasts.

Last month the World Bank warned of a slow-growth crisis in the global economy that could persist over the coming decade amid financial sector turmoil, high inflation, the ongoing effects of Russia’s invasion of Ukraine, and three years of COVID-19.

Meanwhile, OECD raised its forecasts for global growth back in March saying it expects global growth to reach 2.6% this year and 2.9% in 2024 but warned that the outlook remains fragile, and risks remained tilted to the downside.

--Reuters contributed to this report

TOKYO (Reuters) - Japan's service sector activity expanded at a record pace in May, a private-sector survey showed on Monday, thanks to a recovery in overseas demand and a surge of foreign tourists as pandemic restrictions were eased further.

The final au Jibun Bank Japan Services purchasing managers' index (PMI) rose to a seasonally adjusted 55.9 last month from the previous peak of 55.4 in April.

That compared with the flash reading of 56.3 and was well above the 50-mark that separates expansion from contraction for a ninth straight month.

"Firms were buoyed by the easing of the few remaining pandemic restrictions and have noted strong increases in demand, notably from overseas and inbound tourism," said Usamah Bhatti, economist at S&P Global (NYSE:SPGI) Market Intelligence.

"The upward trend looks set to continue in the near and medium term," as outstanding business expanded at a record rate and business optimism held near an all-time high.

The government has scrapped strict pandemic-related border controls and reclassified COVID-19 to the same level as seasonal flu.

The number of foreign visitors to Japan climbed to a post-pandemic high of nearly 2 million in April.

The subindex measuring outstanding business rose at the fastest pace on record as disruptions caused by the pandemic continued to wane.

Business expectations for the coming year remained robust, though the pace of increase slowed slightly from April, the survey showed.

Service sector companies hired more workers for the fourth month in a row, with the rate of job creation the second fastest since September 2007.

Input prices and prices charged for services continued to rise but at a slower pace than in April.

The composite PMI, which combines the manufacturing and services activity figures, expanded at the fastest pace since October 2013. The index advanced to 54.3 in May from 52.9 in April, staying above the break-even 50 mark for the fifth straight month.

By Sam Nussey

TOKYO (Reuters) - SoftBank Group Corp shares jumped 5% in early Friday trade as the technology investor - which is preparing an initial public offering of chip designer Arm - was caught up in a frenzy for semiconductor and artificial intelligence-related stocks.

The Japanese conglomerate, which has been hit by the slumping value of its tech portfolio, has seen its shares gain 17% since last week's close.

Still, they are up only 6.4% year-to-date, compared with 172% for U.S. chipmaker Nvidia (NASDAQ:NVDA) Corp - an expected beneficiary of investment in AI - and 39% in the Philadelphia SE Semiconductor Index.

On Friday, SoftBank passed the psychological level of 6,000 yen for the first time since February.

"We expressed a view that SBG stock will rally ahead of the ARM IPO later in the year... But given (the) market's fascination for semi-stocks, we think it makes sense to move early," Jefferies analyst Atul Goyal wrote in a client note, upgrading his recommendation on the stock to "buy".

Other beneficiaries of enthusiasm for chip-related stocks included equipment makers Advantest Corp and Tokyo Electron Ltd, which have climbed 109% and 50% respectively year-to-date.

SoftBank CEO Masayoshi Son, who has argued that the rise of artificial intelligence drives his investments, has also been caught up in recent enthusiasm for generative AI, which proponents compare to the arrival of the internet.

"He feels that 'finally my time has come'," SoftBank Chief Financial Officer Yoshimitsu Goto told reporters at an earnings briefing last month.

By Doyinsola Oladipo

NEW YORK (Reuters) - Airbnb Inc on Thursday filed a lawsuit against New York City over a new law it called a "de facto ban" against short-term rentals set to go into effect in July, which the company says will limit the number of people who can host rentals in the city.

City councils around the United States are increasingly introducing ordinances to regulate short-term rentals. Some of them require hosts to obtain licenses and pay registration fees or limit short-term rentals in business districts.

The company's filing in the New York State Supreme Court says New York's city council, through legislation passed in 2022, effectively implemented "its most extreme and oppressive regulatory scheme yet, which operates as a de facto ban against short-term rentals in New York."

Airbnb, in a letter to hosts, said "today’s filing comes only after exhausting all available paths for a sensible solution with the City."

The law, according to the filing, will make it more difficult for hosts to do business, requiring them to register with the New York City Mayor's Office of Special Enforcement (OSE) and to certify that they will comply with "the maze of complex regulations" for zoning, multiple dwelling law and housing maintenance code as well as construction code.

The short-term rental company is requesting that the court blocks the enforcement of "Local Law 18".

OSE application reviews will ensure "that only a miniscule number of hosts will ever be granted a registration," Airbnb said in the filing.

A New York City spokesperson said in a statement that the administration of Mayor Eric Adams "is committed to protecting safety and community livability for residents, preserving permanent housing stock, and ensuring our hospitality sector can continue to recover and thrive."

The Mayor's office said it will review the lawsuit.

Airbnb said that in the first week of July, more than 5,500 short-term rentals are reserved to host more than 10,000 guests in New York City.

The company said in the filing a previous law which went into effect in 2021 prompted 29,000 hosts to leave the short-term rental market in New York.

The number of short-term rental listings available in New York City increased 27% year-over-year in April 2023 but listing counts are 32% below 2019 levels, according to short-term rental analytics company AirDNA.

"The vast majority of listings in New York are either private or shared rooms, commercial properties, or listings that only support long-term stays," said AirDNA Chief Economist, Jamie Lane.

Airbnb’s annual net revenue in New York City in 2022 was $85 million, according to the filling.

By Lucia Mutikani

WASHINGTON (Reuters) - U.S. job growth likely slowed in May, with wages coming off the boil, potentially allowing the Federal Reserve to skip an interest rate hike this month for the first time since embarking on its aggressive policy tightening campaign more than a year ago.

Nevertheless, the Labor Department's closely watched employment report on Friday is expected to still show the labor market remaining tight. The unemployment rate is forecast climbing to 3.5% from 3.4% in April but the report will confirm that the economy remained far away from a dreaded recession, though more pockets of weakness are emerging.

"The jobs report is likely to show another step down in the pace of growth, but still a very strong labor market," said Bill Adams, chief economist at Comerica (NYSE:CMA) Bank in Dallas. "The Fed is under less pressure to raise interest rates at its meeting this month, than at any time over the last year and a half."

The survey of establishments is likely to show nonfarm payrolls increased by 190,000 jobs last month after rising 253,000 in April, according to a Reuters survey of economists.

It would mark a slowdown from the monthly average of 285,000 in the first four months of this year, but stay well above the 70,000-100,000 needed per month to keep up with growth in the working-age population.

Data for March and April would be closely watched for revisions. The government lowered employment gains in February and March by a combined 149,000 last month.

Despite massive layoffs in the technology sector after companies over-hired during the COVID-19 pandemic and the drag from higher borrowing costs on housing and manufacturing, the services sector, including leisure and hospitality, is still catching up after businesses struggled to find workers over the last two years. Industries like healthcare and education also experienced accelerated retirements.

The backfilling of these retirements and increased demand for services are some of the factors driving job growth. Pent up demand for workers was underscored by Labor Department data this week showing there were 10.1 million job openings at the end of April, with 1.8 vacancies for every unemployed person.

But cracks are emerging. A Conference Board survey on Tuesday showed the share of people viewing jobs as "plentiful" dropped in May to the lowest level since April 2021.

While the Fed's "Beige Book" report on Wednesday described the labor market as having "continued to be strong" in May, it noted that "many contacts" were "fully staffed," and some "were pausing hiring or reducing headcounts."

Temporary help employment, a harbinger for future hiring, is down by 174,000 since its peak in March 2022.

PROGRESS ON INFLATION

But the overall labor market remains upbeat, with first time applications for state unemployment benefits hovering at very low levels. Most economists expect payrolls growth to continue at least through the end of the year.

Average hourly earnings are expected to have risen by 0.3% after jumping 0.5% in April, which was attributed to a calendar quirk. That would keep the year-on-year increase in wages unchanged at 4.4% in May. Annual wage growth averaged about 2.8% prior to the pandemic.

Slowing wage inflation is corroborated by other measures like the Atlanta Fed's wage tracker, which has come off its peaks. Government data on Thursday showed sharp downward revisions to unit labor costs in the first and fourth quarters.

"We're making progress on inflation, you can't expect the inflation problem to go away in a year," said Brian Bethune, an economics professor at Boston College. "It doesn't make sense to push the economy into some kind of artificial recession, because you're going to do more harm than good."

Financial markets see a nearly 70% chance of the Fed keeping its policy rate unchanged at its June 13-14 meeting, according to CME Group's (NASDAQ:CME) FedWatch Tool. The Fed has raised its benchmark overnight interest rate by 500 basis points since March 2022.

The average workweek is forecast unchanged at 34.4 hours. Some companies are probably reducing hours rather that cut jobs.

The household survey from which the unemployment rate is calculated is likely to show solid employment gains, though an ongoing strike by 11,500 members of the Writers Guild of America poses a downward risk. The Labor Department's Bureau of Labor Statistics, which compiles the employment report, did not record the work stoppage in its May strike report.

"Those striking workers could show up as unemployed in the household survey, however," said Nancy Vanden Houten, lead U.S. economist at Oxford Economics in New York.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one, was likely unchanged at 62.6% after a recent surge in participation in the prime age group.

By Ankur Banerjee

SINGAPORE (Reuters) - Asian stocks surged on Friday as the progress on the bill to raise U.S. debt ceiling and increasing hopes that the Federal Reserve might stand still on interest rates in its next meeting helped perk up investor appetite for risky assets.

The U.S. Senate is on track to pass a bill to lift the government's $31.4 trillion debt ceiling late on Thursday in Washington, Democratic Majority Leader Chuck Schumer said, after the House of Representatives passed the bill on Wednesday.

The Treasury Department has warned it will be unable to pay all its bills on June 5 if Congress fails to act.

MSCI's broadest index of Asia-Pacific shares outside Japan spiked 1.13% higher. Australia's S&P/ASX 200 index rose 0.57%, while Japan's Nikkei was 0.71% higher.

China shares have been hamstrung by worries over stuttering post COVID-19 recovery. The Shanghai Composite Index was set to open 0.2% higher while, Hong Kong's Hang Seng index was set to open up 2% higher.

Data overnight showed the number of Americans filing new claims for unemployment benefits increased modestly last week and private employers hired more workers than expected in May, pointing to continued labour market tightness.

Harry Ottley, an economist at Commonwealth Bank of Australia (OTC:CMWAY), said the signs of slowing wage pressure has raised hopes that the Federal Reserve will pause raising interest rates in two weeks.

Traders have steadily dialled back their bets on the Fed raising interest rates in two weeks, with markets pricing in a 20% chance of the central bank hiking by 25 basis points compared to 50% chance a week earlier, according to CME FedWatch tool.

"Investors were also buoyed by news that the U.S. House of Representatives had passed a U.S. debt ceiling bill in a crucial step to avoid a U.S. default, with the measure moving to the US Senate," CBA's Ottley said.

Focus now shifts to the Labor Department's closely watched unemployment report for May, due on Friday. The data will help determine whether the Fed sticks with its aggressive rate hikes.

Comments from Fed officials also helped embolden Fed pause hopes, with Philadelphia Federal Reserve President Patrick Harker saying U.S. central bankers should not raise interest rates at their next meeting.

"It's time to at least hit the stop button for one meeting and see how it goes," Harker said.

Overnight, the Nasdaq and S&P 500 closed at their highest since August 2022 as investors embraced a resilient labor market amid optimism the Fed can engineer a soft economic landing.

U.S. Treasury yields also fell on Thursday. In early Asian hours, the two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 0.6 basis points at 4.347%, having slipped around 5 basis points on Thursday.

The yield on 10-year Treasury notes was up 0.2 basis points to 3.610%, while the yield on the 30-year Treasury bond was down 0.6 basis points to 3.829%.

In the currency market, the dollar index, which measures U.S. currency against six major peers was flat after dropping 0.6% overnight, with the euro up 0.01% to $1.0762.

The Japanese yen weakened 0.11% to 138.93 per dollar, while Sterling was last trading at $1.2527, up 0.02% on the day.

U.S. crude eased 0.01% to $70.09 per barrel and Brent was at $74.26, down 0.03% on the day.

Spot gold dropped 0.1% to $1,976.69 an ounce. U.S. gold futures fell 0.05% to $1,977.10 an ounce.

SYDNEY (Reuters) - Australia's independent wage-setting body said on Friday it would raise the minimum wage by 5.75% from July 1, as families grapple with soaring living costs.

The lowest-paid employees will receive A$22.61 ($15.34) an hour from July 1, according to Reuters calculations based on the current rate of A$21.38. The decision from the Fair Work Commission would affect more than 2 million workers.

"The level of wage increase we have determined is, we consider, the most that can reasonably be justified in the current economic circumstances," said the Commission in a statement.

"In our consideration, we have placed significant weight on the impact of the current rate of inflation on the ability of modern award-reliant employees, especially the low paid, to meet their basic financial needs."

Some economists have feared that a sizeable increase could set a benchmark for other wage expectations and complicate the Reserve Bank of Australia's job of returning inflation back to 2-3% target range.

So far, aggregate wage growth - which accelerated to a decade-high of 3.7% last quarter - has lagged forecasts, with Governor Philip Lowe warning of upside risks to wages from weak productivty growth, rather than nominal wages.

($1 = 1.4743 Australian dollars)

BUENOS AIRES (Reuters) - Argentina's central bank purchased $451 million of foreign currency on Wednesday to bolster its dwindling hard currency reserves, after daily sales from farm exports topped $1 billion, providing some relief for the country's hard-hit finances.

The currency move on Wednesday marks the biggest such purchase since late December.

In May, the central bank bought a total of $855 million, according to traders consulted by Reuters, the largest monthly purchase of greenbacks since last September.

The government has incentivized grains exports - Argentina's main source of dollars - in the last two months with a preferential exchange rate, helping bring in over $5 billion in total. That measure formally ended on Wednesday.

The South American country's prolonged economic slump has taken a toll on the bank's foreign currency reserves, which are needed to pay down debt as well as to finance many imports.