Lack of dollars puts pressure before runoff

Business
Typography

By Buenos Aires Herald

Government tries to lower foreign currency demand from importers, savers, tourism sector.

With the bulk of the harvest season long gone, the government is set to face pressure on the already low foreign-currency reserves over the next upcoming weeks before the second round of the presidential elections as demand for dollars is growing from importers, savers and the tourism sector.

Central Bank reserves ended October at US$26.961 billion with a US$6.2 billion (18.9 percent) decline, the largest since January 2006 when the country cancelled its debt with the International Monetary Fund (IMF). Reserves are at their lowest level since April 2014 and have dropped 48 percent or US$25.6 billion since their last record of January 2011.

“The need of foreign currency has grown this year. It’s not a new problem but it has worsened. The future scenario isn’t good, no matter who wins. Problems will only grow as we get closer to the end of the year,” Ariel Setton, Plan Fenix economist, told the Herald. “The government still has tools to use but that would mean carrying out economic policy changes to lower the demand for foreign currency.”

While most of the reserves’ drop can be explained by the Boden 2015 maturity at the beginning of the month and other... (Read More)

Beta 11/2017