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Argentine peso suffers steepest fall since 2002 crisis | Argentine peso suffers steepest fall since 2002 crisis |
(about 14 hours later) | |
Argentina's currency, the peso, has seen its sharpest one-day fall since the country's 2002 financial crisis. | |
The peso fell 11% to stand at an official rate of eight pesos to the dollar. Unofficially, the rate is 13 pesos to the dollar. | The peso fell 11% to stand at an official rate of eight pesos to the dollar. Unofficially, the rate is 13 pesos to the dollar. |
The central bank had been acting to support the waning currency but this week all but gave that up. | The central bank had been acting to support the waning currency but this week all but gave that up. |
Investors have lost confidence in the country. Despite efforts to support the economy, inflation has soared to 25%. | Investors have lost confidence in the country. Despite efforts to support the economy, inflation has soared to 25%. |
The official inflation rate is lower, but government data is not seen as entirely credible by those in the country nor the wider investment community. | |
This year, inflation is expected to top 30%. | |
That erodes confidence in the peso, prompting investors to put their money into US dollars rather than the sinking domestic currency. | That erodes confidence in the peso, prompting investors to put their money into US dollars rather than the sinking domestic currency. |
Restrictions | Restrictions |
Under the presidency of Cristina Fernandez de Kirchner, Argentina has introduced a number of restrictions on transactions with foreign currency. | Under the presidency of Cristina Fernandez de Kirchner, Argentina has introduced a number of restrictions on transactions with foreign currency. |
This week it even introduced new restrictions on online shopping as part of increasingly desperate efforts to stop foreign currency reserves from falling any further. | This week it even introduced new restrictions on online shopping as part of increasingly desperate efforts to stop foreign currency reserves from falling any further. |
Anyone buying items through international websites must sign a declaration and produce it at a customs office, where the packages have to be collected. | Anyone buying items through international websites must sign a declaration and produce it at a customs office, where the packages have to be collected. |
The government now limits tax-free purchases to two a year. | The government now limits tax-free purchases to two a year. |
Argentina's reserves of hard currency dropped by 30% last year, making support for the peso increasingly unaffordable. | Argentina's reserves of hard currency dropped by 30% last year, making support for the peso increasingly unaffordable. |
In 2002, millions of Argentines saw their incomes and living standards collapse amid a crisis that included a government default on international debts and 41% inflation. | In 2002, millions of Argentines saw their incomes and living standards collapse amid a crisis that included a government default on international debts and 41% inflation. |
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