IT HAD already been a startling week in Argentina, thanks to a 15% slump in the value of the peso on January 22nd and 23rd. But the biggest surprise came this morning, when the government announced that Argentine individuals will be permitted to buy dollars for saving purposes, a privilege in effect denied to them since 2011.
Having suffered many bouts of inflation and hyperinflation over the past decades, Argentines are conditioned not to hold their own currency. Instead they have converted their savings into greenbacks, often squirreling dollar bills away under their mattresses and in their freezers. In late 2011, with the aim of defending the Central Bank’s dwindling international reserves, the government tacitly eliminated that option.
The government made no announcement and passed no law in 2011. President Cristina Fernández de Kirchner has denied the existence of any restrictions. But from then on, all Argentines who applied to buy dollars for saving purposes were rejected by the tax agency with nebulous excuses or no explanation at all. The only place to buy dollars was the black market, where the exchange rate sometimes exceeded the official one by as much as 70%.
As of Monday January 27th, the government will supposedly lift this invisible “clamp”. Today’s announcement by Jorge Capitanich, the cabinet...Continue reading
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