Argentina introduces currency controls to support the economy

Argentina has introduced currency controls in an effort to stabilize markets when the country faces a deeper financial crisis.

The government will restrict the purchase of foreign currency following a sharp fall in the peso.

Businesses will need to seek the central bank's permission to sell pesos to buy foreign currency and make transfers abroad.

Argentina also seeks to defer debt payments to the International Monetary Fund (IMF) to deal with the crisis.

In an official bulletin published on Sunday, the government said it was necessary to adopt "a series of extraordinary measures to ensure normal functioning of the economy, to maintain activity levels and employment and to protect consumers."

The Central Bank said that the measures were necessary to "maintain currency stability".

It also said that while individuals can continue to buy US dollars, they will have to seek permission to buy more than $ 1[ads1]0,000 (£ 8,223.50) a month.

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Argentina has struggled with a financial crisis compounded by the president's defeat in a recent early vote.

The peso fell to a record low last month after the vote showed that the business-friendly government of President Mauricio Macri is likely to be blown out by elections in October.

Mr Macri was elected in 2015 on promises to boost Argentina's economy with a sweep of liberal economic reforms.

But the country is in a deep recession. It has one of the highest inflation rates in the world, rising by 22% during the first half of the year.

Argentina's economy contracted 5.8% in the first quarter of 2019, after shrinking 2.5% last year. Three million people have fallen into poverty in the past year.

Last week, Argentina said it would seek to restructure its debt with the IMF by extending its maturity. This would give the country more time to repay the money owed to the IMF.

Rating agencies including Standard & Poor's and Fitch treated the move as a standard, downgrading the country's credit ratings.