BUENOS AIRES, Jan 12: Argentina plans to loosen banking curbs that have sparked massive street protests amid a deep recession now in its fourth year, the vice economy minister said on Friday.
In the short term, we are going to be able to introduce some flexibility so that we can make transactions with money that is unavailable in the system, Jorge Todesca, the No.2 man at the economy ministry, told reporters.
He provided no further details on how the curbs, in place to prevent a run on the fragile financial system, might be loosened.
Todesca also said Argentina is maintaining “intensive” technical contact with the International Monetary Fund, which last month suspended $1.3 billion in aid to Latin America’s third-largest economy in anger at chronic budget overspending.
Argentina’s international reserves, closely watched to gauge the state of the government’s finances, rose 0.09 per cent to $20.015 billion from January 8 to January 9, the central bank said on Friday.
The central bank said the latest figures did not take into account Argentina’s decision over the weekend to devalue the peso amid a deep recession in its fourth year. The reserves had been used to back up Argentina’s dollar-peso currency peg for a decade.
The devaluation officially took effect on foreign exchange markets on Friday, when a partial bank holiday was lifted. Reserves have been relatively stable since the government slapped curbs on cash withdrawals from banks and fund transfers abroad on December 3.
Before the curbs were imposed, reserves fell steadily, dropping more than 18 per cent in November alone, as anxious Argentines swapped pesos for dollars to safeguard savings amid fears of a financial meltdown.
Argentina’s peso, trading freely in the foreign exchange market for the first time in 10 years on Friday, closed at an average 1.65/1.70 (buy-sell rate) to the dollar, dealers said, implying around a 41 per cent devaluation from the old parity rate.
The peso has been fixed at 1.40 to the dollar for exports and official transactions — a 29 per cent devaluation — while the value of a new floating peso will be determined by the markets and will be valid for all other transactions by the public.
The debut of trading in Argentina’s new floating peso was earlier delayed while currency traders sought to decipher Central Bank rules and regulations on the twin exchange rate system designed to help control the currency’s devaluation.
Volume was low and exchange houses, often a barometer of economic sentiment in emerging market nations, were quiet as Argentines shunned the new, high price for the dollar.
Reuters has added a series of new pages for peso exchange rate quotes against the dollar.
IMF: The number two in the Argentine economy ministry Jorge Todesca Saturday claimed the IMF was “incoherent” in refusing talks until the country presents a coherent economic plan.
He made the comments after IMF managing director Anne Krueger ruled out loan talks with Argentina until such a plan is presented.
Mrs Kruger wrote a letter, a few days after the government took office, which itself is very incoherent ... which I consider offensive for Argentina, Todesca told a Buenos Aires radio station.
He said Kruger’s letter raised a number of questions, but that it was not clear whether those were conditions or not.
Todesca dismissed the suggestion the Argentine government did not have coherent economic policies.
We are working in a very coherent way on a program that is consistent and reasonable, and frankly we don’t need IMF officials to tell us every 10 minutes how we must follow the path we have taken only seven days ago, he told Radio 10.
An IMF technical team was due to travel to Argentina Monday. —Reuters/AFP