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| Version 6 | Version 7 |
|---|---|
| Argentina to relax foreign exchange controls | Argentina to relax foreign exchange controls |
| (35 minutes later) | |
| Argentina has announced it will lift its currency controls, which were imposed four years ago to prop up the peso. | Argentina has announced it will lift its currency controls, which were imposed four years ago to prop up the peso. |
| The move is expected to lead to a sharp devaluation of the currency. | The move is expected to lead to a sharp devaluation of the currency. |
| President Mauricio Macri hopes it will boost exports and spark economic growth. | President Mauricio Macri hopes it will boost exports and spark economic growth. |
| But consumers fear it could further drive up Argentina's already high inflation rate, | But consumers fear it could further drive up Argentina's already high inflation rate, |
| Some retailers also expressed concern that shoppers would be cautious in the short term as they see their purchasing power reduced. | Some retailers also expressed concern that shoppers would be cautious in the short term as they see their purchasing power reduced. |
| Argentina has been plagued by financial volatility in recent decades with inflation running at around 25% according to private estimates. | Argentina has been plagued by financial volatility in recent decades with inflation running at around 25% according to private estimates. |
| The central bank's currency reserves have been depleted after the previous leader, Cristina Fernandez de Kirchner, used them to prop up the peso. | The central bank's currency reserves have been depleted after the previous leader, Cristina Fernandez de Kirchner, used them to prop up the peso. |
| With reserves running low and many Argentines turning to the black market to get dollars, Mr Macri promised to change that policy as soon as he took office. | With reserves running low and many Argentines turning to the black market to get dollars, Mr Macri promised to change that policy as soon as he took office. |
| He was sworn in last week. | He was sworn in last week. |
| Market watch | Market watch |
| The peso will be allowed to float when markets open on Thursday. | The peso will be allowed to float when markets open on Thursday. |
| Analysts predict a fall of up to 30% from the current controlled rate of 9.8 pesos to the dollar. | Analysts predict a fall of up to 30% from the current controlled rate of 9.8 pesos to the dollar. |
| They say they expect it could fall to 14.5 pesos to the dollar, the rate at which the currency has been trading on the black market. | |
| Analysis: BBC's Ignacio de los Reyes in Buenos Aires | Analysis: BBC's Ignacio de los Reyes in Buenos Aires |
| The Argentine economy is so dependent on US dollars that grandmothers give their grandchildren 10-dollar bills as birthday presents and adults hoard them under the mattresses. So that is why in dollar-addicted Argentina, the end of the "cepo" or exchange controls was anxiously expected. | The Argentine economy is so dependent on US dollars that grandmothers give their grandchildren 10-dollar bills as birthday presents and adults hoard them under the mattresses. So that is why in dollar-addicted Argentina, the end of the "cepo" or exchange controls was anxiously expected. |
| The government of Cristina Fernandez de Kirchner tried to end the buying of dollars four years ago, but prohibition simply fuelled the black economy. | The government of Cristina Fernandez de Kirchner tried to end the buying of dollars four years ago, but prohibition simply fuelled the black economy. |
| Since then, a legion of informal street sellers in Buenos Aires' main thoroughfare, Paseo Florida, offer foreign currency at much higher rates than the official one which is extremely hard to buy legally. | Since then, a legion of informal street sellers in Buenos Aires' main thoroughfare, Paseo Florida, offer foreign currency at much higher rates than the official one which is extremely hard to buy legally. |
| Argentines also found other creative ways to circumvent restrictions, from organised day-trips to neighbouring Uruguay to get US dollars from cash machines to Bitcoin trading. | Argentines also found other creative ways to circumvent restrictions, from organised day-trips to neighbouring Uruguay to get US dollars from cash machines to Bitcoin trading. |
| The new policy may satisfy middle and upper-class Argentines who will now be able to get their dollars freely. | The new policy may satisfy middle and upper-class Argentines who will now be able to get their dollars freely. |
| But they are also fearful of the consequences: higher prices and a potential devaluation of their currency. | But they are also fearful of the consequences: higher prices and a potential devaluation of their currency. |
| Argentine Finance Minister Alfonso Prat-Gay said he accepted the rate would weaken to "close to" 14.2 to the dollar. | Argentine Finance Minister Alfonso Prat-Gay said he accepted the rate would weaken to "close to" 14.2 to the dollar. |
| He said the central bank had been given the right to intervene if the exchange rate fell too quickly. | He said the central bank had been given the right to intervene if the exchange rate fell too quickly. |
| But he was adamant that change was needed: "The old system had killed the goose that laid the golden egg" by restricting the growth of the economy. | But he was adamant that change was needed: "The old system had killed the goose that laid the golden egg" by restricting the growth of the economy. |
| He outlined that exchange controls would end for all businesses who would be allowed to buy as many dollars as they needed. | He outlined that exchange controls would end for all businesses who would be allowed to buy as many dollars as they needed. |
| But he said, for the time being, ordinary Argentines would still face restrictions on the amount of dollars they could buy a month. | But he said, for the time being, ordinary Argentines would still face restrictions on the amount of dollars they could buy a month. |