Access to dollars for the purpose of paying off foreign credit card debt and for purpose of saving in a stable currency will be taxed at 35%
In Argentina the mistrust of local currency and economic policies, makes people hoard US dollars, no matter the quantity, many of them at homeArgentina’s peso currency plunged further into record low territory after the central bank tightened currency controls. The peso opened almost 0.1% weaker at 75.25 per U.S. dollar, traders said, and the country risk rose 38 basis points to 1,157. The black market peso or blue dollar plummeted 9.7% to open at a new all-time low 145 per U.S. dollar.
In a bid to protect Argentina’s dollar reserves, the central bank tightened controls on buying dollars in the foreign exchange market, transactions involving dollar- denominated bonds and credit card purchases made in foreign currency.
“This strategy, however, may only provide some temporary relief if rapid monetization of fiscal spending remains the norm,” said Credit Suisse’s heads of Latam economics, Juan Lorenzo Maldonado and Alberto J Rojas.
The government on Tuesday also unveiled an ambitious budget, targeting a fiscal deficit of 4.5% of gross domestic product in 2021 and an economic rebound of 5.5%, as the economy struggles in a third straight year in recession after a decade of stagnation. In effect a central bank poll predicted a 12% contraction in 2020.
Access to dollars for the purpose of paying off foreign credit card debt and for purpose of saving in a stable currency will be taxed at 35%, and restricted to the US$ 200 limit, the statement said.
This means the 80 Pesos dollar for the US$ 200 monthly purchase has climbed to 105 Pesos. In Argentina the mistrust of local currency and economic policies, makes people hoard US dollars, no matter the quantity, many of them at home. They call them the mattress savings.
In related news on Wednesday the national stats office Indec announced that inflation during August increased 2,7%, and 18,9% in the first eight months of the year. Likewise in the last twelve months prices climbed 40,7%
The item which grew most in August was Food and Beverages, 3,5%, as well as home equipment and maintenance. However it must be remembered that many prices remain frozen, such as utility rates and even rents, and there is a l ist of basic food basket products which are under price restrictions.
Indec also indicated that wholesale prices climbed 4,1% in August, and 14,7% in eight months.
All government efforts are focused on bringing inflation down from the 53,8% in 2019. This year the rate is expected to reach 40%, while the government budget estimates the rate for 2021 to stand at 29%.
Categories: Economy, Politics, Argentina.
Tags: Argentine peso, hiperinflation, Indec index, Inflation, US dollar.