Hello c2, predictable news, comes around as if by clockwork, to cull the argentine for the people by the people
blogs.ft.com
Argentina: it’s official, no more dollars!  The Argentine government formally announced on Thursday that its citizens will no longer be able to convert their savings from pesos to dollars, something many Argentines do to hedge against inflation and devaluation.
Driving the point home in an interview published Fridayin the pro-government newspaper Pagina/12, Argentine central bank President Mercedes Marcó del Pont noted that the exchange restrictions also applied to real estate buyers purchasing dollar-denominated properties. “People doing these transactions will have to make the payments in pesos,” she said.
It is the latest of a series of currency restrictions, started just after last year’s Presidential election, that are aimed at staunching the flood of US dollars out of Argentina’s central bank. Argentine tax authorities began to require those wanting to buy dollars to apply for permission to do so, and importers were required to match imports with the equal value of exports and, later, to obtain permits for any import. The restrictions have already had negative repercussions across the economy, driving many importers to insolvency, as the FT noted this week, and killing off activity in the real estate market, where most properties are priced and sold in dollars. In Buenos Aires in May, the number of real estate transactions fell 15.4 per cent year-over-year, the sixth straight monthly drop.
To get around the currency restrictions, resourceful importers pay exporters an 8 per cent to 10 per cent commission to use their invoices, Martín Redrado, a former Argentine central bank president, said earlier this year. And Argentines have begun to travel abroad in order to buy hard-to-find and expensive goods with their credit cards, which are not subject to currency restrictions.
In the Pagina/12 interview Marcó del Pont painted the newly formalized restrictions as a healthy response to international uncertainty.
In a scenario of increasing external uncertainty caused by an international crisis, in which the demand for currency to hoard grows, there were several economic policy options: accept a sudden change of exchange rates, finance capital flight with external borrowing or temporarily limit access to dollars for savings. The first two approaches are at odds with government policy. The healthiest thing is this decision.
Many Argentines would disagree with the healthiness of these restrictions. When the government of Argentine President Cristina Fernández de Kirchner first restricted the amount of dollars Argentines could buy, skittish locals pulled $2.3bn in cash out of their US dollar bank accounts in less than a month, fearful the government might confiscate the dollars and forcibly convert them into pesos.
The currency restrictions announced Thursday will probably have far less impact, says Gastón Rossi, director of the Buenos Aires business consultancy LCG and former Secretary of Economic Policy for Argentina (2007-2008), because they have been de facto for the last several months. “In the past you could in theory buy dollars if you had the money, though it wasn’t explicit how much you could get,” he says. “But since the beginning of May no one could buy dollars at the official rate. You could request ‘one peso’ on the tax authority’s web page and they would deny you.” The recent announcement simply formalizes this system. “It shows that for the government the changes aren’t just momentary, but structural. But in itself it doesn’t do anything,” Rossi says.
But Argentines can always count on the black market – where rate on Friday was $5.96 peso/USD compared to the official rate of $4.55 pesos/USD. |
