(Bloomberg) — Argentina’s central bank has tightened access to hard currency further, the latest attempt by the crisis-prone country to contain dwindling reserves amid rising expectations of a currency devaluation.
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Late Thursday the central bank published a rule change affecting banks and another affecting consumers, as it tries to maintain its stock of dollars to help defend the value of the peso.
These measures come on the heels of this month’s midterm elections in which the government lost control of the House of Representatives, and come at a time when the authorities are expected to ramp up negotiations with the International Monetary Fund with more than $40 billion in outstanding payments. It also adds to the current chain of currency restrictions, as savers seek a haven in hard currency amid inflation of up to 50% annually.
“Argentina is advancing in the IMF talks and this requires strong reserves,” presidential spokeswoman Gabriela Cerruti told reporters on Friday when asked about measures affecting travel abroad.
Read more: Argentines race for dollars as devaluation bets rise
The spot peso, which is controlled by the central bank through a creeping peg, fell 0.1% on Friday to 100.8 per dollar. The black market peso, which is traded through informal exchange offices, weakened 0.5% to 201 pesos per dollar.
In the measure targeting consumers, the central bank said it will prevent credit card operators from financing payments through installment plans if they are for overseas tourism, including airline tickets and car rentals. Such plans are popular with Argentines looking to fund their spending in up to 18 installments, allowing them to stabilize prices before inflation drives them up. The measure was published a day before so-called Black Friday shopping day, when stores cut prices to entice consumers.
Cerruti said these travel procedures are “temporary”, and declined to give a specific time period for them. Argentines traveling abroad outnumber foreigners coming into the country by nearly five to one, according to the latest government data, which also reflects the past few months of pandemic-related restrictions.
Shares of travel tour operator Despegar.com fell as much as 16% after the regulations, as well as growing concerns about a new virus variant.
In a separate regulation published late Thursday, the central bank said it would not allow banks to hold net dollar cash positions at the end of the trading day. The rule becomes effective on December 1.
The central bank has spent $1 billion defending the peso in the spot market since October 28, according to official data dating back to November 18. The central bank’s total reserves fell $4.1 billion from their highest level in August, when the government. Receive additional financing from the International Monetary Fund in the form of Special Drawing Rights.
The preferred stock swap, an implied exchange rate derived from operations with assets in which the peso and the dollar trade, has fallen 65% since President Alberto Fernandez took office in 2019, to 219 per dollar on November 24. The official peso, which closed at 100.7 to the dollar on Thursday, is around 120%.
(Updates with comment from the speaker in fourth paragraph.)
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