Argentina Currency Crackdown Dims Investor Hopes of Economic Rebound

Argentina’s standing in global markets is at risk once again after it moved this week to further restrict access to dollars as foreign reserves dry, a move analysts say will hit its much-needed economic revival and investor sentiment, Reuters reported. The central bank on Tuesday tightened the noose for dollar purchases, adding a 35% tax on people who tap a $200 monthly quota, and said card payments abroad would be included in the allowance. It also limited corporate access to foreign currency. The move sparked a selloff of Argentine bonds and stocks, while the price of dollars in unofficial markets spiked, widening a large gap with the official rate. It also put Argentina’s inclusion in the MSCI Emerging Markets Index at risk. “It shows total desperation,” said Agustín Monteverde, an economist at consultancy Massot Monteverde & Asociados in Buenos Aires. “They have just hung a sign around their necks that says ‘meltdown’.” Read more

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