Argentina bans buying dollars as a way to save

Fri Jul 6, 2012 6:46am IST

Related Topics

* Cenbank changes norms to reflect new gov't policy

* Dollars can be bought for travel abroad, mortgages

* Currency controls stoke black-market trade

BUENOS AIRES, July 5 (Reuters) - Argentina's central bank on Thursday formally banned people from buying dollars for the purpose of saving them, confirming the government's de facto policy aimed at safeguarding foreign reserves.

Argentines tend to convert their pesos into greenbacks as a hedge against high inflation and to protect against potential currency devaluations, which they have endured through decades of boom and bust economic cycles.

President Cristina Fernandez slapped new controls on foreign currency purchases just after winning re-election in October, requiring the tax agency approve each individual transaction.

But starting in May, the government sharply limited those approvals, permitting people to buy foreign currency only if they could show they would be traveling abroad.

This sent the black-market rate for dollars soaring. Argentines now pay about 5.95 pesos per dollar on the black market while the official rate is 4.53.

Thursday's central bank statement suspended a norm that had allowed individuals to buy up to $2 million a month without having to specify the destination of the funds.

People will be able to buy foreign currency if they are traveling overseas or need to repay dollar-denominated mortgage loans, the central bank said. They can also buy dollars at the official rate to make humanitarian donations.

Argentina's economic growth is slowing sharply and the government uses central bank reserves to pay its debts. It has been virtually shut out of global credit markets since staging a massive 2002 debt default.

The currency controls are aimed at stemming capital flight and easing downward pressure on the peso in the local foreign-exchange market, where the central bank intervenes nearly every day.

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared