Thursday, May 23rd 2013 - 07:01 UTC

Cristina Fernandez administration limits overseas dollar extractions to a minimum

Continuing with the so called ‘dollar clamp’ Argentine institutions issuing credit cards will further limit the extraction of dollars from automatic cashiers: travellers to neighbouring countries will only be allowed 100 dollars every three months and those visiting non neighbouring countries, 800 dollars per month.

Argentine visitors queuing in Uruguay to extract ‘Colonia dollars’

The measures are the result of a request from the Argentine Central bank and were announced late Wednesday. Further details are expected on Thursday.

The new credit card conditions are geared to impede the flight of foreign currency from Argentina, particularly the so called “Colonia dollar” which refers to day-trips to neighbouring Uruguay to extract greenbacks.

Although this overseas operation already has a 20% tax, it does not need to fill any forms or wait for a favourable answer from the Argentine Central bank, and most important means purchasing dollars at the net equivalent of 6.20 Pesos, when in the Buenos Aires parallel market the ‘blue’ greenback currently stands at 8.90 Pesos having previously reached a peak of 10.40 Pesos.

The Argentine central bank in April started sending letters to all holders of credit cards that had extracted dollars in cash overseas demanding they explain how they spent the money.

The bank was already working along this line by demanding Argentine private banks to impose a 15.000 dollars limit on overseas extractions. Later it requested all credit card holders who collected more than 5.000 dollars, from September/November last year or 10.000 dollars during the first quarter of this year to render a precise detail, supported with documents, of how the hard currency was spend.

The latest decision is anticipated to have a huge impact on neighbouring countries such as Uruguay, Chile and Brazil where Argentine tourists flock during summer months. Since Argentine Pesos are not accepted in the region, or anywhere but in Argentina, and dollars are hard to come by, not even with a credit card, tourism in Mercosur countries is seriously threatened.

Argentina since the default of 2001/02 has not been able to return to voluntary money markets and must appeal to budget and trade surpluses, which were effective during the first years of the Kirchner couple rule. However extravagant domestic expenditure to ensure political support, unorthodox polices and a falling trade surplus have seen the Central bank lose international reserves.

Faced with this scenario and a growing distrust of current policies and a steady capital flight, the Cristina Fernandez administration has imposed increasingly tighter rules regarding hard currency, among which banning new savings in dollars and only admitting contracts in Pesos which has strongly limited the real estate market. Likewise happens with tourists wanting to travel overseas and in need of foreign currency.

Next October mid term elections are scheduled and Cristina Fernandez could lose the working majority she currently enjoys in Congress if there’s not a rebound of the slowing economy. For this the whitewashing bill under discussion in Congress and dollar clamp to ensure sufficient reserves in the Central bank to pay for imports and honour debt payments.

15 comments Feed

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1 Xect (#) May 23rd, 2013 - 07:21 am Report abuse
Wow it looks like things are going from disaster to full collapse.

Now where is Danny to lecture us on economics LOL!
2 Ayayay (#) May 23rd, 2013 - 08:43 am Report abuse
Did they just pyongyang?
3 owl61 (#) May 23rd, 2013 - 10:24 am Report abuse
Always look on the bright side of things. There wasn't much to do in Colonia anyway and the ferry ride would sometimes make a lot of people seasick.
Staying home isn't so bad.
4 Sir Rodderick Bodkin (#) May 23rd, 2013 - 12:12 pm Report abuse
We North Korean, Venezuela and Cuba now.

I really hope shits hits the fan this year, so we can put this witch out of the government.
5 ChrisR (#) May 23rd, 2013 - 01:39 pm Report abuse
There is nothing like bashing the population of Argentine into the ground and starving them of what is rightly theirs to ensure they vote for you at the next election: OR so that seems to me, otherwise why do these twats keep getting elected?
6 Chicureo (#) May 23rd, 2013 - 01:43 pm Report abuse
Tourist season in Viña del Mar and La Serena will not be the same without the girls from Mendoza and San Juan strolling along our beaches in Chile.
7 yankeeboy (#) May 23rd, 2013 - 06:16 pm Report abuse
Exit Visas are sure to follow...

Like all the good dictatorships around the world
8 Captain Poppy (#) May 23rd, 2013 - 07:11 pm Report abuse
Seems they were only to control the blue dollar for so's not like they have wealth to be able to travel anyway and if they do, they are an enemy of the state.
9 toxictaxitrader2 (#) May 23rd, 2013 - 07:23 pm Report abuse
A question for C,F.K.
Why would your neighbors ever do anything for you ever again?
You have wrecked your own economy,now your ruining theirs!
Thanks a bundle.
10 bushpilot (#) May 23rd, 2013 - 09:00 pm Report abuse
I don't think candidates from this gal's party are going to get elected next time.

Is CFK just a frontperson and it is really Moreno and Maximo and La Campora that are running the country?

Maybe she's just become too tired and it is just working out that others are calling the shots more these days?

When La Campora put the squeeze on LAN airlines recently, Argentina's reputation with it's neighbors had no room to suffer that additional blow to their reputation. What must Chilenos and Brazilians think of Argentina now?

If CFK was in power, she would have stopped La Campora from doing that right away.

Another article lately, about Gibraltar, said it is where they found evidence of one of the latest and last settlements of Neanderthal people.

Is it possible that Neanderthals actually still exist amongst homo sapiens?
11 Captain Poppy (#) May 23rd, 2013 - 10:44 pm Report abuse
Yes they were renamed kirchneral la camporalis
12 Troy Tempest (#) May 24th, 2013 - 02:32 am Report abuse
10,11 Bush, Poppy

“...last settlement of Neanderthal people.”

That 'last settlement' was the one the Neanderthals made with 93% of the Bondholders for 30 cents on the $1.

There won't be any more bailouts after that ripoff!
13 Captain Poppy (#) May 24th, 2013 - 09:31 am Report abuse
What gets me, as there are many things, that these trolls post about others countries debts, but they fail the understand they are PAYING their debt, not walking away from it and claiming to manage their debt loads better than others. I really hope they Mussolini her ass.
14 Biguggy (#) May 24th, 2013 - 10:04 am Report abuse
That has been Argentina's 'way' from the virtual 'birth' of the nation, borrow money and then default. The first big one was, I believe in 1828 when 'they' defaulted on a one million pound loan from Barings bank in London in 1824. That was never repaid.

In July 1832 Francis Baylies the US Charge d'Affaires wrote to Edward Livingstone, the US Secretary of State ”.. empowered to negotiate a commercial Treaty with Buenos Aires, writes to Livingston opposing any agreement; “ … for we should abide by it, and they would consider the violation of a treaty no greater offence than a lie told by schoolboy. With the Bey of Tripoli or the Emperor of Morocco we might for a time maintain unviolated the provisions of a Treaty but with these people if a temporary advantage could be gained they would violate a treaty on the day of its ratification.”
In other word 'they' could not be trusted then and I believe the same to be true today.
15 cornelius (#) May 26th, 2013 - 12:05 pm Report abuse
There is no hope the Argentines are masochist they love misery and pain no smarts to get out of their dictatorship It looks like the Paraguayans were smarter to get rid of that bastard dysfunctional catholic child rapist and abuser, yesterday a woman senator elected in Paraguay call him a “dysfunctional person” the sad story is he still in the government as a senator! I guess is South American politics is dysfunctional too.

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