Close

Donate today to keep Global Voices strong!

Watch the video: We Are Global Voices!

We report on 167 countries. We translate in 35 languages. We are Global Voices. Watch the video »

Over 800 of us from all over the world work together to bring you stories that are hard to find by yourself. But we can’t do it alone. Even though most of us are volunteers, we still need your help to support our editors, our technology, outreach and advocacy projects, and our community events.

Donate now »
GlobalVoices in Learn more »

Argentina: New Foreign Exchange Controls

On 13 October, 2011, the Argentine government launched a series of regulations in order to control the sale of foreign currency. The measures aim to slow the rise in value of the North American dollar, of which the Argentine Central Bank [es] has had to reduce its reserves in order to avoid the continuing devaluation of the Argentine peso against the dollar.

The measures, agreed on by the Banco Central de la Rep. Argentina (Argentine Central Bank) [es] and the Ministry of Economy [es] are the first to be put in place since the elections in which incumbent President, Cristina Fernandez de Kirchner, was re-elected with 54% of the vote.

The Negocioaz [es] blog sets out the new measures:

Image from Flickr user MoneyBlogNewz, reproduced under licence Attribution 2.0 Generic (CC BY 2.0)

A partir del inicio de la jornada cambiaria del lunes, el gobierno argentino ha comenzado a implementar un ferreo control a la compra de moneda extranjera, sobretodo para las compras de dólares estadounidenses. Pese que en Argentina existe un fuerte control de quienes cambian dinero, a partir de hoy este se ha fortalecido. Además de solicitar documento de identidad, recibos de sueldo, constancia de inscripción tributaria y copia de facturas a su nombre, ahora se incorpora el hecho de que tiene que solicitarse permiso vía internet a la Administración Federal de Ingresos Públicos, la cual autoriza o no si la persona puede comprar divisas extranjeras.

From the opening trading on Monday, the Argentine government set about implementing firm controls over foreign exchange and above all the buying of US dollars. Although Argentina already has stringent controls over those who may exchange currency, from today these have been strengthened. As well as asking for proof of identity, pay slips, tax returns and copies of named invoices, now permission must also be sought via Internet from the Federal Administration of Public Revenues, who will authorise the purchase of foreign currency, or not.

It goes on to say:

Hay que recordar que el Gobierno Argentino ha tomado una serie de medidas para evitar la fuga de dólares, controlando su salida colocando una serie de medidas restrictivas. El miércoles de la semana pasada dispuso que las petroleras y mineras liquiden en el país las divisas de sus exportaciones, dejando sin efecto medidas tributarias específicas que permitían la libre disponibilidad del 70% de las divisas obtenidas por exportaciones de derivados del petroleo y minerales.

It should not be forgotten that the Argentine government has taken a series of measures designed to avoid the flight of dollars, controlling their exit from the economy by implementing a series of restrictive measures. Wednesday of last week it was stipulated that oil and mining companies should sell off, within the country, any foreign currency generated through exports, leaving  specific tax measures unaffected which allow 70% of the currency obtained through exportation of oil and mineral commodities freely available.

What brought about this romance between the Argentine people and the dollar? The Spanish daily newspaper El País [es], published a report on October 31 in answer to this question:

Argentina crece a uno de los ritmos más rápidos de Latinoamérica, pese a la crisis de la eurozona. La mayoría de su población está conforme con su presidenta, Cristina Fernández de Kirchner, que acaba de ser reelegida. Sin embargo, empresas, bancos y ciudadanos de alto poder adquisitivo desconfían de la moneda argentina y no dejan de comprar dólares, clásico refugio de ahorro en este país acostumbrado a una historia de devaluaciones cada cierto tiempo.

Argentina is one of the fastest growing countries in Latin America, despite the Eurozone crisis. The majority of its population agrees with their President, the recently reelected Cristina Fernández de Kirchner. However, businesses, banks and high net worth citizens have little faith in the Argentine currency and continue to buy dollars, the classic refuge of cash savings in a country which has grown accustomed to a history of periodic devaluation.

It then says:

Los argentinos que compran dólares lo hacen por la incertidumbre sobre un eventual impacto de la crisis de la eurozona, pero sobre todo porque consideran que el peso se encuentra sobrevalorado después de años de inflación superior al 20% anual en los que la cotización de la moneda norteamericana apenas subió. El temor a una devaluación del peso, que el Gobierno de Fernández ha descartado, se ha acrecentado en los últimos dos meses, a partir de la depreciación del real, antes sobrevalorado.

Those Argentines who buy dollars do so in reaction to the uncertainty over the eventual outcome of the Eurozone crisis, but above all because they consider the peso to be overvalued following years of inflation in excess of 20% annually during which the value of the dollar has barely risen.  The fear of a devaluation of the peso, which the Fernández government has ruled out, has increased over the last few months, following the devaluation of the previously overvalued Brazilian Real.

The blog Abel [es] comments on why the Argentine population always turns to the dollar as a savings currency:

Es una decisión racional porque el ahorro en dólares, aunque se desvaloricen, permite que se pueda recurrir a él en cualquier momento. Ahorrar en tierras, propiedades, aunque se valoricen, tiene dos graves inconvenientes: no es para los pequeños; y no se puede convertir en efectivo fácilmente. En acciones, plazos fijos… los argentinos tenemos malas experiencias, que tardarán en borrarse de la memoria de los individuos.

It is a logical decision because investing in dollars, although they lose value, means you can turn to them at any time. Investing in land or property, even though their value goes up, also has significant drawbacks: it isn't for small investors and it can’ t be easily turned into cash. And it will be a while before we Argentines are able to forget about the bad experiences we've had investing in shares and fixed term savings.

And how did the new exchange controls work from Monday, October 31? Prensa Hoy [es] comments on the problems with authorisation that arose with the System put in place between the AFIP and the Banks:

Este lunes se registraban numerosos inconvenientes a la hora de comprar divisas, tras la implementación de nuevas medidas de control por parte del Gobierno nacional y que obliga a la AFIP a cotejar los datos del cliente con el organismo antes de llevar adelante la operación.

Por error del sistema implementado, casi ninguna persona estaba habilitada para comprar. Cuando los compradores se lanzaron sobre los mostradores, [el] aplicativo que cruza los datos colapsó por la cantidad de consultas simultáneas.

This Monday numerous problems were registered when it came to buying foreign exchange. They resulted from the new control measures put in place by national Government which required the AFIP to compare client data with it before giving the going ahead for an operation. 

An error in the system resulted in almost no one being authorised to buy. When buyers came onto the money markets the application which exchanged data crashed due to the weight of simultaneous consultations.

However, after a few days the mechanism was functioning much better.  The blog La Generación Siguiente (Next Generation) [es] commented:

el mecanismo de compraventa de divisas se va aceitando, lo que pudo verificarse en el bajo porcentaje de rechazos del sistema y las operaciones concretadas por hasta 500 mil dólares en varias casas de cambio y bancos de la city. Si bien continúa siendo elevado el número de curiosos que visita la base de datos de la AFIP, se exhibió una importante merma en las consultas. Según el ente recaudador, el porcentaje de operaciones inválidas se redujo a un 1,6 por ciento, mientras que para los bancos privados consultados el guarismo orilló el 20 por ciento.

The currency exchange mechanism is running much better, which is born out by the low percentage rate of rejections by the system and concrete operations valued at 500 million dollars across various exchange houses and city banks. While the number of people visiting the AFIP database out of sheer curiosity remains high, a significant reduction in consultations has been seen.  According to the body responsible for tax collection the number of void transactions has gone down to 1.6%, while for those private banks consulted the figure hovers around 20%.

The measure affected and will continue to affect many people whose ability to buy foreign exchange will be decided as a function of their income and expenditure. The well known television presenter Susana Giménez was one of those affected with the AFIP system declaring her to be “inconsistent” when she wanted to buy U.S. dollars. In the same La Generación Siguiente blog Santiago Llamas [es] related what happened to the Argentinian diva:

Susana Giménez, quien anteriormente estuvo implicada en la compra de autos de lujo con franquicia para discapacitados (escondidos bajo fardos de alfalfa en su estancia en Pilar) y en la estafa a la Fundación “Felices los Niños”, fue rechazada por “inconsistente”. La estrella tiene declarado ante la AFIP un ingreso anual de 50.000 pesos –unos 3850 pesos mensuales, calculando los dos medio aguinaldos–. A pesar de ello, en lo que va del año ya adquirió un volumen de divisas equivalente a once millones de pesos (unos 2.600.000 dólares, al tipo de cambio promedio).

Susana Giménez, who was previously implicated in both the purchase of luxury cars (hidden under bales of alfalfa on her Pilar farm) using exemptions for the disabled, and defrauding the “Felices los Niños” (Happy Children) Foundation, was rejected as “inconsistent”.  The star declared  an annual income of 50,000 pesos – some 3850 pesos per month, including the two bonuses to the AFIP. In spite of this, so far this year she has already bought an amount of currency equivalent to eleven million pesos (some 2.6 million dollars, at the prevailing exchange rate).

While the controls cover all currencies, no comment has been made about the Yen, Euro, Real or other currencies that trade on the foreign exchange markets. For the time being, the dollar remains stable as do the Argentinian Central Bank's reserves, but the dilema for Argentines of whether to invest or buy dollars has not gone away, something which is reflected in Germán Rafael Pirán's post on his blog Argentina Salvajizada (Savaged Argentina) [es]:

El dilema de todo gobierno populista no se si existe, pero el de sus victimas, los habitantes es en Argentina el mismo: invertir o fugar capitales al exterior, buscando seguridad, como las golondrinas que viajan en busca de calor y seguridad porque el frio les parece disgustar.

I don't know if one single dilemma exists for all populist governments, but as for its victims, the dilemma is the same for all Argentines:  invest or get capital out of the country, in search of security, the way swallows migrate in search of the heat because they don't like the thought of the cold.

World regions

Countries

Languages