Argentina restricts United States dollar purchases as its currency crisis escalates

Argentina restricts United States dollar purchases as its currency crisis escalates”

Argentina has imposed currency controls in a bid to stabilise markets as the country faces a deepening financial crisis.

The central bank of Argentina has imposed restrictions on US dollar (USD) purchases in an effort to revive its plunging currency, the Argentine peso.

According to the decree, the BCRA will establish under what circumstances "purchasing foreign currency and precious coins, and transferring them overseas, will require prior authorization".

The measure, which is scheduled to be in place through the end of the year, means major exporters will need permission from the central bank to access the foreign-exchange market to purchase foreign currency and make transfers overseas.

In the wording of Sunday's decree, the temporary measures would "regulate more intensely the currency exchange regime and strengthen the normal functioning of the economy".

In a bid to calm market turbulence, last week Argentina asked the International Monetary Fund to restructure its debt payments on a $56 billion bail-out loan agreed a year ago.

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Argentina has re-introduced currency controls to protect its flagging peso, in a radical change by president Mauricio Macri from the free-market policies he has embraced since taking office four years ago.

It also said while individuals can continue to buy United States dollars, they will need to seek permission to purchase more than $10,000 (£8,223.50) a month.

The central bank said the measures were necessary to "maintain currency stability".

Centre-left Peronist challenger Alberto Fernandez garnered a wider-than-expected lead over business-friendly incumbent Mauricio Macri, causing market fears over a potential return to the interventionist policies of former president Cristina Fernandez de Kirchner, Mr. Fernandez's vice-presidential candidate.

Last week, Argentina said it would seek to restructure its debt with the International Monetary Fund by extending its maturity.

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

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