Sep 16, 2020
Argentina intensifies monetary control against dollar purchases
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(Bloomberg) – Argentina is tightening its belt on its foreign exchange market in a bid to limit demand for US dollars as reserves decline.
The head of the central bank, Miguel Pesce, announced on Tuesday night new measures that include a 35% tax on dollar purchases by retail savers, which will be applied along with the previous “solidarity tax” of 30%.The additional tax will also affect purchases with credit cards in dollars, he clarified.
Argentine companies facing maturities of more than US $ 1 million in dollar-denominated debt per month must present a restructuring plan, Pesce said during a press conference in Buenos Aires. The central bank also asked the CNV, the country’s securities regulator, to increase the minimum holding period for dollar assets received from abroad to 15 business days. The holding period, known in the country as “parking”, will no longer be necessary for sales of dollar-denominated assets that are settled in local currency.
The measures introduced by the government of President Alberto Fernández aim to reduce the difference between Argentina’s official exchange rate and that of the black market, which has soared to more than 70% as net international reserves have decreased to less of US $ 7,000 million. In 2019, the central bank set a quota of US $ 200 per person for monthly purchases of US banknotes.
Nonetheless, Argentines have been buying dollars at a record pace as the peso loses value almost daily as a result of some anti-business government decisions, an economy in freefall due to the pandemic and a lack of savings options. More than 3.9 million people, or nearly 10% of the country’s population, bought greenbacks in July, according to recently released central bank data.
Argentina has not discussed the new measures with the International Monetary Fund, the central bank head said. The country wants to renegotiate a US $ 44 billion financing agreement with the fund and will request to delay payments to the body until 2024, Economy Minister Martín Guzmán said on Sunday.
The announcement of more restrictions coincides with the submission of Fernández’s first budget proposal to Congress, which included some optimistic estimates for the crisis-prone economy. The Peronist government assumed control of the country on December 10 after defeating former pro-market president Mauricio Macri in the general elections.
Gross domestic product is projected to rebound 5.5% in 2021 after a 12.1% contraction this year, the government said in its proposal, which was published minutes before the currency measures. Annual inflation will slow to 29% next year, the peso will weaken to 102.4 per dollar, and the country will post a primary fiscal deficit of 4.5%, according to the plan.
While the government’s growth forecast for 2021 is in line with economists’ expectations, inflation – a chronic weak point in Argentina – is forecast to be significantly higher than the official estimate, of around 47% according to the survey of central bank economists.
Original Note: Argentina Tightens Currency Controls Further as Dollar Gap Soars
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NYC man fatally struck by car after driver loses consciousness
The fatal incident unfolded just before 4:45 p.m. at Atlantic Avenue and Milford Street in Cypress Hills, where a car wash employee pulled the 2006 Liberty SUV off the lot, popped a U-turn and jumped the curb at the intersection, striking the man, according to cops.
Police believe the 63-year-old driver had a medical episode, causing him to lose control of the car. When cops arrived, the driver was unconscious, and he was transported to a nearby hospital for treatment.
The victim died at the scene, police said.