Economy

Argentina Enacts Currency Restrictions as Peso Falls

Argentina Enacts Currency Restrictions as Peso Falls

The measure, which is scheduled to be in place through the end of the year, means major exporters, which will need permission from the central bank to access the FX market to purchase foreign currency and make transfers overseas.

It also said while individuals can continue to buy United States dollars, they will need to seek permission to purchase more than $10,000 (£8,223.50) a month.

The Central Bank of Argentina said the measures were meant to "maintain currency stability".

The decision was seen as a blow to anti-interventionist president Mauricio Macri's administration as his supporters and financial markets eye national elections next month that polls suggest will see leave his left-leaning rival triumphant.

Argentina's government and central bank are desperately trying to stabilize the economy after the results of the August 11 primary election sent bonds, stocks and the peso into a tailspin.

The central bank of Argentina has imposed restrictions on US dollar (USD) purchases in an effort to revive its plunging currency, the Argentine peso. They will not be permitted to stockpile dollars, the bank said.

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Fernandez is now the front-runner for Argentina's upcoming presidential election in October. "There were restrictions before, but there are none now", said a source familiar with the new central bank measure.

The peso opened up 0.42% stronger at 59 per dollar, but the currency weakened 1.56% in unofficial markets to a record low of 64 pesos per dollar, traders told Reuters, an unusual divergence that reflects investor anxieties over the controls. And no companies will be allowed to accumulate USA dollars.

The central bank announced on Friday that banks would need to seek prior authorization before distributing their earnings, in order to "avoid any lack of money" and safeguard the liquidity of Argentina's financial system.

Argentina is also seeking to defer debt payments to the International Monetary Fund (IMF) to deal with the crisis.

A government statement said it was necessary to adopt "a series of extraordinary measures to ensure the normal functioning of the economy, to sustain the level of activity and employment and protect consumers".

Fernandez de Kirchner, in office from 2007 to 2015, clamped down on access to USA dollars in a bid to protect the central bank's precarious reserves.


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