|ARGENTINA LIFTS CURRENCY CONTROLS|
Aruba, December 21, 2015 - Newly elected president Mauricio Macri makes what economists say is bold move in order to increase exports and spur economic growth.
Argentina is to lift its currency controls and said it would allow the peso to float when markets open Thursday, setting the stage for a sharp devaluation.
The move follows promises by President Mauricio Macri to implement reforms in order to increase exports and spur economic growth.
Macri, a free-market advocate who took office last week, has vowed to regain investor trust in Argentina, shattered by its 2002 record default, a lack of trustworthy official economic data and heavy state intervention.
Argentina’s previous leader, Cristina Fernández de Kirchner, used central bank reserves to prop up the peso.
By lifting controls, Macri also hopes to spark a wave of investment in an economy that is battling low foreign reserves and double-digit inflation.
“He who wants to import will be able to do so, and he who wants to buy dollars will be able to buy them,” said the finance minister, Alfonso Prat-Gay, adding that this government intended to normalise the economy, after eight years of interventionism under Fernández.
Farmers in Argentina, a grains-exporting powerhouse, have been waiting for the peso to weaken before selling stockpiles of soybeans. Manufacturers have argued for controls to be lifted so they can import crucial parts for production.
Asked what he expected the exchange rate to be now, Prat-Gay said there was “no magic number”.
However, the most realistic level at the moment was the blue-chip swap rate, used to buy Argentinian assets traded abroad. That rate is currently around 14.2 pesos per dollar, compared with the official exchange rate of 9.8275, implying a devaluation of around 30%.