Published: Tue, September 03, 2019
Markets | By Otis Pena

Argentina imposes currency controls amid debt crisis

Argentina imposes currency controls amid debt crisis

"As Macri's government runs out of options, it will most likely have to resort to very unpalatable measures that most adult Argentines hoped they would never experience again", said Emilio Ocampo, an independent economist and consultant.

With these measures, companies will need special permission to purchase foreign currency or make purchases overseas.

- The government of President Mauricio Macri on Sunday imposed foreign-exchange controls on Argentine exporters at the end of a week of financial uncertainty that saw a sharp drop in the value of the peso.

Under the new measures put in place, all companies in Argentina must now request permission from the country's central bank to sell pesos and buy foreign currency to make transfers overseas.

Argentina's government and central bank is desperately trying to stabilize the economy after the results of the August 11 primary election sent bonds, stocks and the peso currency into a tailspin.

The fund said it would "stand with" Argentina in what it called "challenging times".

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The measures undertaken by the central bank do not prevent people from withdrawing money from their accounts, but there are special restrictions in place to prevent people spending more than $10,000 United States dollars per month. Last week, risk spreads blew out to levels not seen since 2005 while the local peso currency extended its year-to-date swoon to 36%.

"It is an uncomfortable measure for us that Argentina has already had", Lacunza said in an interview with the América TV channel on Sunday night.

Individuals will also need permission to purchase more than $10,000 (£8,224) a month.

Mr. Fernandez is now the front-runner for Argentina's coming presidential election in October.

"These measures are therefore not anticipated to have any material adverse effect on President's business which continues in the normal way", it said.

The peso opened up 0.42% stronger at 59 per dollar, but the currency weakened 1.56% in unofficial markets to a record low of 64 pesos per dollar, traders told Reuters, an unusual divergence that reflects investor anxieties over the controls. "It may get even darker if confidence is not restored".

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