With its economy in a tailspin and poverty on the rise, Argentina has imposed currency controls.
This now means that permission must be granted to purchase more than US$10,000 a month.
The Argentine peso is now valued at 60 to US$1.
The government issued a statement on the matter which read: “ We have had 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 the consumers. These measures were intended to maintain currency stability.”
“Inflation is running at around 22 per cent with many Argentinians rushing to convert pesos into U.S. dollars.”
Argentina looks likely to default on its IMF obligations and is now looking to defer its payments.
Companies will now need the Central Bank’s say so before concluding foreign currency transactions.
Argentina has had a turbulent relationship with the IMF, having to go cap in hand, seven times since 1955.
Today, inflation is running at around 22 per cent with many Argentinians rushing to convert pesos into U.S. dollars.
The move to put in place foreign currency controls should serve to slow down the depletion of Argentina’s foreign currency reserves.
The decision to restrict making transfers abroad and to curb buying more than US$10,000 a month will remain in effect for the remainder of this year.
“Peronist candidate Alberto Fernandez in the interests of his country, should calm turbulence by setting out quickly a clear, coherent economic programme. This should reassure investors that a future Fernandez administration will not repeat past mistakes of excessive government spending, price controls and nationalisations and will respect central bank independence.
“If Argentina is to breach its unhappy cycle of populism followed by austerity followed by more populism it urgently needs a national consensus around sustainable, long term economy policy,” wrote the Financial Times’s Editorial Board.