UNITED STATES, WASHINGTON (OBSERVATORY) — The Argentinean government has introduced capital controls to stop the decline in foreign exchange reserves and the fall of the peso, according to Bloomberg.
The Central Bank has set a 5-day limit for exporters to repatriate revenue in foreign currency.
Institutions will require the permission of the central bank to buy dollars in the foreign exchange market, with the exception of foreign trade.
Purchases of dollars by private individuals, as well as money transfers of Argentines to foreign accounts not belonging to them, will be limited to $ 10 thousand per month.
For non-residents, currency purchases will be limited to $ 1,000 per month.
Argentina’s currency crisis is getting out of hand. On Thursday and Friday alone, about $ 3 billion was spent from foreign exchange reserves, as the government tried to pay off short-term debt and slow down the fall of the peso.
A country runs the risk of running out of its net reserves, which are less than $ 15 billion, within a few weeks if it continues to lose money at this pace.
Peso fell more than 25% last month after the results of the preliminary stage of the election showed that a market-friendly government has little chance of retaining power after the October vote.
The international rating agency Standard & Poor’s last week lowered Argentina’s long-term credit rating by three steps in connection with the government’s “unilateral” plan to extend the maturity of securities.
Argentinean finance minister Hernan Lacunza said Wednesday that the government wants to extend the repayment term of short-term debt and will negotiate new repayment terms for IMF loans.
Argentina’s long-term sovereign rating in foreign and national currencies fell to “SD” or selective default, and short-term – to “D”. Since August 30, they have been upgraded to “CCC-” and “C” respectively. “Since the new conditions [short-term bonds circulation] took effect immediately, the default was liquidated,”
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