On Monday, the Central Bank of the Republic of Argentina moved to limit the amount of dollars that can be purchased to stanch large outflows of foreign reserves from the country and keep the peso steady, according to Al Jazeera.
Dollar purchases are now restricted to $200 per month via bank accounts and $100 per month in cash until December. It's a huge cut from the $10,000 limit and currency controls imposed in September to protect the economy following the August primary election, where a surprise sweep by Fernandez sent Argentina's stocks, bonds, and currency sliding.
It's important to note that in Argentina there is a black market for dollars -- You can buy dollars at "blue" price, which is more expensive. This means that the government is subsidizing the difference.
After the primaries, the price of dollars started ballooning and the government (which was clearly set to lose in the national elections), set a price for purchasing USD and a USD 10,000 per month limit.
So what the Argentinian people did was as follows: get paid in ARS, buy as many USD as you can afford at the official (lower) price, then go to the black market and sell at a higher price, which netted them more ARS than they had at first. Repeat until you reach the USD10000 limit.
They call this "hacer puré" (make mashed potatoes), and caused the unofficial price to go even further up. This scheme is basically "free money" for the people at the cost of the federal reserves, but it's nothing new for the Argentinian economy (the 90s were crazy). After the national elections, the government cut back on the limit down to USD 200 per month, rendering the scheme unusable (for now).
A friend from Argentina was lamenting to me that's not very much after new currency controls were imposed through December.
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On Monday, the Central Bank of the Republic of Argentina moved to limit the amount of dollars that can be purchased to stanch large outflows of foreign reserves from the country and keep the peso steady, according to Al Jazeera. Dollar purchases are now restricted to $200 per month via bank accounts and $100 per month in cash until December. It's a huge cut from the $10,000 limit and currency controls imposed in September to protect the economy following the August primary election, where a surprise sweep by Fernandez sent Argentina's stocks, bonds, and currency sliding.