Argentina
buys up US dollars
Argentina's
government has placed a virtual ban on purchases of foreign currency
and is trying to buy every US dollar available as it bids to increase
central bank reserves and repay government debt.
President
Christina Kirchner wants Argentinians to start saving in the
country's peso currency.
Those
measures have forced thousands to the streets to protest against what
they call the government's authoritarian ways.
The
country has one of the highest inflation rates in the world and many
Argentinians would gladly trade their pesos for the more stable US
dollar.
This
has led to the creation of a black market where it is possible for
thousands to buy and sell dollars, escaping the government's control.
Al
Jazeera's Teresa Bo reports from Buenos Aires
Argentina
loses a third of its dollar deposits
Argentine
banks have seen a third of their U.S. dollar deposits withdrawn since
November as savers chase greenbacks in response to stiffening foreign
exchange restrictions, local banking sources said on Friday
8
June, 2012
Depositors
withdrew a total of about $100 million per day over the last month in
a safe-haven bid fueled by uncertainty over policies that might be
adopted as pressure grows to keep U.S. currency in the country.
The
chase for dollars is motivated by fear that the government may
further toughen its clamp down on access to the U.S. currency as high
inflation and lack of faith in government policy erode the local
peso.
"Deposits
keep going down," said one foreign exchange broker who asked not
to be named. "There is a disparity among banks, but in total
it's about $80 million to $120 million per day."
U.S.
dollar deposits of Argentine banks fell 11.2 percent in the preceding
three weeks to $11.5 billion, according to central bank data released
on Friday. The run on the greenback has waxed and waned since
November, after President Cristina Fernandez won a second term on
promises of deepening the state's role in the economy.
From
May 11 until Friday, data compiled by Reuters from private banks
showed $1.9 billion in U.S. currency had been withdrawn, or about 15
percent of all greenbacks deposited in the country.
Feisty
populist leader Fernandez was re-elected in October vowing to "deepen
the model" of the interventionist policies associated with her
predecessor, Nestor Kirchner, who is also her late husband.
Since
then she has limited imports, imposed capital controls and seized a
majority stake in top energy company YPF.
A
spokesman for the central bank said on Friday that the rate of dollar
withdrawal from Argentina's financial system shows signs of slowing.
"We
have seen a tendency toward fewer withdrawals, to about $90 million
(per day) over the last week from $120 million the week before,"
the spokesman said a day after the bank lifted daily reserve
requirements on dollar deposits to help banks respond to steady drum
beat of withdrawals.
DITCHING
HER DOLLARS
The
near-impossibility of buying dollars at the official rate is driving
some savers and investors to pay a hefty premium in the black market.
Many
are taking what dollars they can get their hands on and stashing them
under the mattress or in safety deposit boxes, fearing moves by the
government to forcibly "de-dollarize" the economy.
Officials have strongly denied any such plan.
The
president's battle to slow capital flight and fatten the central bank
reserves needed to pay the public debt has prompted even tighter
controls in recent weeks, making it almost impossible to buy dollars
at the official rate. The effects have been felt throughout the South
American country's economy.
For
example. Argentines, who normally pay for new homes with stacks of
dollar bills, have been struggling to get their hands on U.S.
currency since Fernandez started imposing stringent controls on
dollar buying late last year.
She
wants Argentines to end their love affair with the greenback and
start saving in pesos despite inflation clocked by private economists
at about 25 percent per year.
Fernandez
set an example on Wednesday by vowing to swap her only
dollar-denominated savings account for a fixed-term deposit in pesos.
But
savers in crisis-prone Argentina are notoriously jittery. Memories of
tight limits on bank withdrawals and a sharp currency devaluation
remain fresh a decade after the country's massive sovereign debt
default.
"There
is a lot of fear, considering everything that has happened before,"
another foreign exchange broker said. "Confronted by risk,
whatever kind of doubt, depositors pull their dollars out of the bank
and wait to see what happens.
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