Photo: Foreign currency
Argentina’s government announced Friday that it would allow citizens to purchase foreign currency for savings accounts, an easing of restrictions that comes amid the peso’s steepest fall against the dollar in more than a decade.
“We’ve decided to authorize the purchase of dollars for savings” by individuals, Cabinet chief Jorge Capitanich, accompanied by Economy Minister Axel Kicillof, said in a brief announcement.
The measures will take effect starting Monday.
Capitanich said that Argentines would be authorized to purchase dollars in proportion to their declared income and that the surcharge for those currency exchanges, as well as for credit and debit card purchases abroad, would be lowered from 35 percent to 20 percent.
The government made the decision after determining that the price of foreign currency had “reached an acceptable level of convergence for our objectives,” Capitanich said.
Kicillof, for his part, said Friday the partial lifting of restrictions on dollar purchases was aimed at “providing certainty” after the peso declined sharply due to speculative attacks by the local subsidiary of Royal Dutch Shell.
He said the sharp depreciation over the past two days, in which the peso lost more than 11 percent of its value relative to the dollar, showed that “there are very powerful interests attacking our economic project.”
“On (Thursday), surprisingly, (the dollar) was at 7.20 and there was request to buy dollars at 8.40 and later it was determined that the one placing the order was willing to pay 8.70, which we all know was Shell (Argentina).”
“They wanted a dollar at 13 pesos, and that’s why we had that very strong speculative attack yesterday,” Kicillof added.
The Argentine peso continued to slide Friday after the government’s announcement, falling 1.88 percent prior to the market opening to 8.10 to the dollar.
On the black market, which has emerged due to difficulties in obtaining dollars legally, the peso continued to be sold Friday at a much higher rate of 13 per greenback.
The government’s announcement came in a week in which the peso suffered its two biggest daily declines since the 2002 economic crisis.
In October 2011, President Cristina Fernandez’s administration imposed a series of restrictions on foreign currency transactions.
Among other things, Argentines were barred from purchasing dollars for savings accounts, commonly used by people as an inflation hedge and to protect themselves against a declining peso.
But the currency restrictions - imposed as an alternative to devaluation - have not prevented a sharp drop in Argentina’s foreign currency reserves, which currently stand at a seven-year low of $29.3 billion.