Argentina beat currency controls on businesses on Sunday to prevent capital flight after the peso lost more than a quarter of its value since last month's primary, in its latest move to avert a rapidly spiraling economic crisis.
Bank will require exporters to repatriate revenue from sales abroad, while all companies, not just banks, must seek authorization to sell pesos for foreign currency after losing $ 3 billion in reserves on Thursday and Friday alone.
The move follows the surprise announcement Wednesday that Argentina will attempt to defer payments of $ 101[ads1]bn of debt, which Standard & Poor's card agency classified as default on Thursday.
It reverses one of the first major achievements of President Mauricio Macri, who, shortly after taking office in December 2015, abruptly removed strict capital controls that had been in place since 2011. These controls had prompted the MSCI index to strike Argentina, about its status as an emerging market, demotivates it into a border market.
With markets that are delightful at the prospect of a return to populism in Argentina, which caused Argentine asset prices to plummet further this week, the government on Sunday issued a decree aimed at reducing market volatility and "containing the impact of fluctuations in financial flows on the real economy. "
"Given various factors affecting the development of the Argentine economy and the uncertainty caused in the financial markets, [government] considered it necessary to take a series of extraordinary measures to ensure normal operation of the economy, maintaining the level of [economic] activity and employment and to protect consumers, "the official statement says.
The Central Bank specified that individuals would be limited to purchases of no more than $ 10,000 a month "to protect savers and achieve greater exchange rate stability". It added that no one is restricted from withdrawing dollars from their accounts, while there are no barriers to trade or travel restrictions.
Investors were expecting some form of capital control. But some fear that the move could put the IMF's final payment of its $ 57 billion collateral program secured by Argentina during a currency crisis last year, with a $ 5.4 billion tranche due at the end of September.
“How will the IMF hand over the latest collateral in this environment? "Asked Ed Al-Hussainy, an analyst at Columbia Threadneedle, noting that there is a" massive moral hazard. "Both in pesos and dollars," must now be anxious that they may be next to restructure or reprofile their assets. – this would not be unique in the recent history of Argentina. "
"The power vacuum between now and the likely deployment of Alberto Fernández on December 10 makes all of Argentina's imbalances and macro headwinds much more challenging than normal," he added.