Argentina on Sunday imposed foreign-exchange controls on exporters as it closed out a week of financial uncertainty that saw a sharp drop in the peso.
Exporters were ordered to seek permission from the Central Bank of Argentina before purchasing foreign currency, according to a decree published in the government gazette.
In other new measures, transferring money abroad now requires permission from the Argentine government and individuals seeking to buy US dollars now face a monthly limit of 10,000 greenbacks.
However, there are no restrictions on people withdrawing US dollars from their bank accounts — a practice known in Argentina as the “corralito,” applied in late 2001 and the spark for the worst economic and political crisis in Argentine history.
All these new measures are to be in place until Dec. 31.
Last month, markets were rattled when pro-business Argentine President Mauricio Macri suffered a huge loss in party primary elections, and his leftist opponent Alberto Fernandez emerged as the favorite for next month’s presidential elections.
The decree published on Sunday said that the currency measures were needed temporarily to “regulate more intensely the currency exchange regime and strengthen the normal functioning of the economy.”
Argentina has been in recession since last year, and is battling rising unemployment and one of the world’s highest inflation rates, running at more than 55 percent.
In a bid to calm market turbulence, Argentina last week asked the IMF to restructure its debt payments on a US$56 billion bail-out loan agreed last year.
The IMF said that it was studying the new measures taken by the Macri government.
“Staff will remain in close contact with the authorities in the period ahead and the Fund will continue to stand with Argentina during these challenging times,” the IMF said in a statement.
The Central Bank of Argentina bought US$300 million in pesos on Tuesday last week to try to calm markets, but the currency still depreciated by almost 2.5 percent.
The currency weakened by 20 percent in the week after the primaries, while the Buenos Aires stock exchange dropped by 30 percent.
Just less than two weeks ago, ratings agencies Fitch and S&P downgraded Argentina’s credit rating from “B” to “CCC” and “B-” respectively.
Fernandez romped to victory in what was essentially a de facto opinion poll, with 47 percent of the vote to Macri’s 32 percent.
Such a result in next month’s election would send Fernandez — who has been highly critical of the IMF loan — to the presidential palace without need for a run-off in November.
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