The Argentine Central Bank announced on Thursday it will officially ban the purchase of dollars for savings, the latest in a series of measures to discourage the buying of greenbacks.
The details of the decision which will be released in a communiqué from the monetary authority is a step further in the so called “dollar clamp” which the administration of President Cristina Fernandez has been implementing since last year to compensate for the scarcity of dollars and her pledge to repay all bonds maturing this year in “US dollars”.
Central bank sources however pointed out that the measure is not extensive to long term deposits or current accounts in foreign currency. The latest move banning the purchase of dollars for savings is an “indefinite suspension”.
The Argentine tax revenue office or AFIP will continue with the current system of allowing dollar purchases by importers and for other purposes following on specific requests. In reality since last June 14, it was impossible to legally purchase US dollars for savings since no authorizations were granted.
Under the current AFIP implemented system dollar purchase requests are viable for tourism, real estate transactions, foreign trade, and acquisition of vehicles, aircraft, vessels or scientific equipment.
The latest decision adds to Wednesday’s announcement by President Cristina Fernandez indicating that Argentine banks must offer to lend companies 15 billion pesos (3.3 billion dollars) by the end of the year at rates well below private inflation estimates, a central bank statement said on Thursday.
The central bank said banks will have to put 5% of their total private deposits, calculated as of June, into the new credit lines. The loans should finance capital goods purchases and new construction or expansion projects aimed at increasing the production of goods and services, the central bank said.
The loans must be disbursed by Dec. 31, although additional credit could be granted for more complex projects through to June 30, 2013, the central bank said.
This measure ... is part of government policies oriented toward safeguarding production and Argentine jobs in light of the current international context, which has shown an increase in global risk and uncertainty, the statement said.
The loans should carry a maximum interest rate of the Badlar reference rate, which Cristina Fernandez said averaged 11.9%t per year for private banks in June, plus 400 basis points. The minimum loan period is three years.
Inflation is running at about 25% per year, according to private estimates that more than double the government's discredited consumer price statistics.
The MerVal index of leading stocks closed down 1.87% on Thursday, dragged lower by banking shares.
Shares in Banco Macro ended 7.31% lower at 8.24 pesos per share, while leading financial group Grupo Financiero Galicia, which owns Banco Galicia , shed 5.46% to end at 2.94 pesos per share.
Lending levels in Argentina are among the lowest in Latin America. Many smaller companies do not qualify for state-subsidized bank loans because of tough requirements, and both deposits and loans tend to be short-term due to inflation and the country's volatile history.
Cristina Fernandez's allies in Congress reformed the central bank's charter in March to allow the monetary authority to regulate and steer credit flows to target long-term productive investment.