The central bank of Argentina on Wednesday imposed a new rule limiting the import of foreign luxury goods as part of its effort to stanch the leakage of its own international currency reserves.
Luxury goods like high-end sports cars and private planes will be subject to the new rule saying that importers will have to get their financing from overseas or wait a year to pay their overseas supplier, all in an effort to slow outflow of central bank dollar reserves.
“The Board of Directors of the Central Bank of the Republic of Argentina established that importers of luxury goods and a specific set of final goods must obtain financing before entering the official market to cancel payments,” the bank said in a statement. The measure takes effect on Thursday, it said.
The most recent central bank data says international reserves were at US$ 39.5 billion. At the end of December 2019, the bank had US$ 44.8 billion in reserves.
Importers buy dollars at the official exchange rate in order to pay their overseas suppliers. Those dollar purchases have helped strain the bank’s reserves.
Argentina is trying to bolster its international reserves as it contends with a recession that has been worsened by the COVID-19 pandemic, while the peso weakens amid high inflation.
“The measure covers luxury products such as high-end automobiles and motorcycles; private jets with a value of more than one million dollars; recreational use boats; drinks like champagne, whiskey, liqueurs and other spirits priced over US$ 50 a liter; caviar; pearls, diamonds and other precious stones, among other products,” the statement said.
The peso closed at 84.9 per U.S. dollar on Wednesday. On the black market, the local currency closed at 160 to the greenback.
WIth information from Reuters