Argentina brings back currency controls as economic crisis deepens

Argentine central bank tightens FX market access as peso plunge burns through reserves

The latest restrictions are purely aimed at shoring up the peso - which has lost more than a third of its value against the dollar since the results of the primaries - taking it to 59.52 pesos per dollar on Friday. It does, however, restrict people from buying more than $10,000 a month, or making transfers exceeding that amount per month.

Under the plans, companies will need to gain permission from the central bank to sell pesos to buy foreign currency and make transfers overseas.

The government said the new currency controls were needed in order "to ensure the normal functioning of the economy".

The peso fell to a record low last month after the vote showed that the business-friendly government of President Mauricio Macri is likely to be ousted in elections in October.

The central bank said the measures were necessary to "maintain currency stability".

The measures undertaken by the central bank do not prevent people from withdrawing money from their accounts, but there are special restrictions in place to prevent people spending more than $10,000 United States dollars per month. They will not be permitted to stockpile USA dollars, the bank said. Local stocks and bonds also experienced a severe crash.

It was at a level of 52 pesos to the dollar on Monday after the decree was announced.

'There is no denying the macro situation in Argentina is challenging and volatile and everyone who believes in the medium-to-long-term prosperity of this country from all sides of the political spectrum hopes for a more stable position once the uncertainty of the impeding elections is resolved, ' chairman Peter Levine said.

The South American country's worldwide dollar and euro-denominated bonds also fell to record lows on Monday while its financial stocks tumbled and risk premiums shot up after the currency controls were imposed.

Market confidence was further shaken last week when ratings agency Standard & Poor's downgraded Argentina's creditworthiness further into junk bond territory, accusing the country of defaulting on its debts as it seeks to extend bond maturity dates and its obligations to the International Monetary Fund (IMF).

Argentina has imposed currency controls in a bid to stabilise markets as the country faces a deepening financial crisis.

He had lifted numerous protectionist practices of his predecessor, Cristina Fernandez de Kirchner.

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