Tags: Argentina | peso | black market

Argentina Promises Crack Down on Black Market Peso Trade

Wednesday, 22 Jan 2014 01:24 PM

BUENOS AIRES — Argentina will crack down on black market trade in the country's currency, cabinet chief Jorge Capitanich said on Wednesday, as the local peso extended losses in unofficial trade.

Due to heavy currency controls, the black market has become the only access point to U.S dollars available to average Argentines. Given the country's history of regular financial crises, Argentines tend to try to save in U.S. dollars.

The black market peso weakened 1.25 percent to 12 per U.S. dollar, on Wednesday, leaving it 73.3 percent weaker than the official exchange rate. The swoon came on top of a 37 percent drop in the unofficial peso exchange rate over the preceding year.

"The actions that the government will take will not be announced before they are taken," Capitanich said. "We plan not just actions by the executive but by the judicial branch as well."

President Cristina Fernandez's policies, from currency controls meant to stop capital flight, to heavy stimulus spending unencumbered by inflation targeting, has made Argentina a no-go zone for all but the most risk-hungry investors.

Private economists, rejecting official government data as lacking credibility, say consumer prices rose by more than 25 percent last year, one of the world's highest inflation rates. The government said full-year 2013 inflation was 10.9 percent.

Consumer prices will likely rise about 30 percent in 2014, according to a Reuters poll of analysts last week. That would be the highest rate since 2002 when millions of middle class Argentines were pushed into poverty by a crisis punctuated by a sovereign bond default and 41 percent inflation.

© 2017 Thomson/Reuters. All rights reserved.

 
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Argentina will crack down on black market trade in the country's currency, cabinet chief Jorge Capitanich said on Wednesday, as the local peso extended losses in unofficial trade.
Argentina,peso,black market
263
2014-24-22
Wednesday, 22 Jan 2014 01:24 PM
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