Argentina’s central bank limits dollar purchases after Peronist victory
Fears for run on reserves after centre-right Maurcio Macri loses to populist Alberto Fernandez
The Central Bank of Argentina (BCRA) has introduced heavy restrictions on how many US dollars individuals can buy, in the wake of the Peronist leader Alberto Fernandez’s election victory this weekend.
Fernandez’s success has seemed probable since his resounding victory in a presidential primary in August. The return of a populist left-wing party has spooked many international investors and wealthy Argentines. The defeated president, free-marketeer Mauricio Macri said he had invited Fernandez for talks on an orderly transition, seen as essential for Argentina’s shaky economy and markets.
Argentina is the third largest economy in Latin America but has endured economic turmoil for many years. Even Macri limited dollar purchases to prevent a further devaluation of the Argentine peso in August.
Whereas Macri allowed citizens to purchase $10,000 per month, following the election the central bank has announced restrictions of $100 a month in cash and $200 a month via bank accounts.
In a statement the bank said: “Given the current degree of uncertainty, the board of the BCRA has decided to take a series of measures this Sunday that seek to preserve the reserves of the central bank.” This will provisionally last into December.
A century ago Argentina was one of the top ten wealthiest countries in the world. Now it is in recession, with inflation of about 55 per cent, risking its ninth debt default, having already received a number of huge loans from the International Monetary Fund (IMF).
The peso-dollar exchange rate is at its lowest for a decade, standing at $0.01669 in mid-morning trading.