Argentina's central bank cuts dollar purchase limit

People can now withdraw a maximum of $200 a month in measure to stem outflow of foreign exchange reserves.

    To stem a sharp drop in its foreign currency reserves and the value of its currency, the peso, Argentina's central bank has made it much harder to withdraw US dollars [File: Sarah Pabst/Bloomberg]
    To stem a sharp drop in its foreign currency reserves and the value of its currency, the peso, Argentina's central bank has made it much harder to withdraw US dollars [File: Sarah Pabst/Bloomberg]

    Argentina's central bank announced early on Monday morning it would sharply cut the amount of dollars individuals could buy, amid concerns over outflows of foreign exchange reserves accelerating after President Mauricio Macri was voted out of power.

    The Central Bank of the Republic of Argentina, known as the BCRA, said it would restrict dollar purchases to $200 per month via bank accounts and just $100 each month in cash, until December, a dramatic adjustment from the $10,000 restriction the bank imposed at the beginning of September along with other currency controls to stem a slide in the peso.

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    "Given the current degree of uncertainty, the board of the BCRA has decided to take a series of measures this Sunday that seek to preserve the reserves of the Central Bank," the entity said in a statement.

    Guido Sandleris, the central bank chief, will hold a news conference at 8:30am (11:30 GMT) to explain the details of the measures, it added.

    Argentina's Peronists swept back into power on Sunday, ousting conservative Mauricio Macri in an election result that puts Latin America's third biggest economy back under the control of a more leftist government after it was battered by an economic crisis.

    The country has been grappling with frenzied markets since an August primary election vote where Peronist candidate Alberto Fernandez - now president-elect - soundly beat Macri, sparking a sell-off of the local peso currency, bonds and equities.

    The sharp slide in the peso prompted Macri's administration to roll out capital controls to protect the currency, including imposing caps on dollar purchases. Foreign reserves have nonetheless tumbled by more than $20bn since. They now stand at $43.5bn.

    Argentina’s bonds are trading in deeply distressed territory, at about 40 cents on the dollar, and the government has said it wants to extend maturities both with private creditors and the International Monetary Fund.

    That task will likely fall to the incoming government though Fernandez has yet to lay out an economic plan or name his cabinet.

    SOURCE: News agencies