Argentine President Javier Milei delivers a speech during the inauguration at the Casa Rosada Emiliano LASALVIA / AFP10/12/2023
The Central Bank of Argentina, now under the command of President Javier Milei, restricted foreign exchange operations in the country this Monday (11), after the government postponed the announcement of its first economic measures until this Tuesday (12). The Argentine press calls the measure a “virtual bank holiday” and requires the approval of operations with American currency this Monday by the BC management.
“During the day, stock exchange transactions will be approved if necessary,” the B.C. said. The measure comes as part of the change in banking authorities that will be appointed this Monday by the new government. “The action was ordered to give the management of the executive branch time to comply with the administrative procedures for the formation of new authorities and to announce and implement the policies they will implement,” the statement said.
Under Alberto Fernández, the government introduced a series of currency bands due to a lack of hard currency and the government's reluctance to let the U.S. currency fluctuate in line with the market. One of them, the Savings Dollar, intended for Argentinians who wanted to buy the currency as individuals, was banned from sale.
The central bank's current president, Miguel Pesce, asked to resign from his post last week but was still awaiting executive approval. This Monday, Economy Minister Luis “Toto” Caputo announced the name of Santiago Bausili for the new presidency, although it will still take a few days before his name is published in the Official Journal.
In practice, the decision states that any foreign exchange transaction related to foreign trade must be approved by the bank's board of directors. According to Argentine newspapers, the movement in the financial market is seen as a harbinger of a longawaited devaluation of the peso.
The central bank's new board is expected to soon announce measures to correct the exchange rate distortion that exists in Argentina. There are currently more than 15 types of exchange rates in circulation, and the official exchange rate is 150% outdated compared to the most commonly used exchange rate (known as the “Blue Dollar”). Caputo is expected to announce soon how he plans to make the correction.
Government postpones measures
The government had previously announced that it would postpone the announcement of economic measures it would take to contain the country's serious crisis. Expectations in the financial market were enormous given today's announcements, as Javier Milei's government has not yet presented a clear economic plan.
Last Friday (8), the Argentine newspaper Clarín had announced that Milei and Caputo would make first announcements in the early hours of this Monday with a series of measures that do not require the support of Congress. However, this morning Manuel Adorni, designated spokesman for the Presidency, announced that the changes will be confirmed this Tuesday, with no set date.
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