CovOps
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| Subject: Anarcho-Capitalist NEWS: Argentina's Pesos Go Underground as Dollar Ban Backfires Sat Oct 27, 2012 1:03 am | |
| Argentine President Cristina Fernandez de Kirchner’s foreign-exchange controls are driving pesos underground.
A quarter of Argentines are keeping their pesos at home, up from 19 percent a year ago, according to a survey conducted in September by the Catholic University of Argentina and TNS Gallup. The increase reflects how people are shifting money out of banks to trade dollars in a cash-dominated black market where the cost of the U.S. currency has surged 35 percent this year, according to Buenos Aires-based research company EconViews.
The migration of cash out of the financial system is stripping banks of funding and undermining Fernandez’s efforts to hold down interest rates and bolster an economic rebound. The 30-day deposit rate has jumped 1.8 percentage points in the past four months to 14.8125 percent. A three-day decline of 0.8 percentage point that pared the increase in the benchmark rate will prove short-lived as annual inflation of 24 percent drives more Argentines to move money into the underground economy, said Eric Ritondale, an economist at Econviews.
“Money’s moving out of the banking system and out of the formal economy,” Ritondale said in a telephone interview from Buenos Aires. “As much as the government wants to promote the use of pesos, the truth is they won’t be able to achieve it. You can’t get it done” with interest rates below inflation.
http://www.bloomberg.com/news/2012-10-26/pesos-go-underground-as-dollar-ban-backfires-argentina-credit.html |
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RR Phantom
Location : Wasted Space Job/hobbies : Cayman Islands Actuary
| Subject: Re: Anarcho-Capitalist NEWS: Argentina's Pesos Go Underground as Dollar Ban Backfires Sat Oct 27, 2012 1:44 am | |
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