By Ken Parks
BUENOS AIRES--Argentina's financial system lost $92 million in foreign
currency deposits last week as capital controls and a vibrant black
market for U.S. dollars spur residents to yank greenbacks out of their
bank accounts.
Foreign-currency deposits fell to $9.39 billion for the week ended
Aug. 17, down from $9.48 billion a week earlier, the central bank said
in statement Friday.
The central bank reports deposit data with a one-week lag.
Almost $6.7 billion in foreign-currency deposits have left the banking
system since President Cristina Kirchner imposed exchange controls
last October to limit capital flight that was draining the central
bank's international reserves.
Those controls have become even stricter since early May, with the
government approving only limited purchases of dollars and other hard
currency by individuals and businesses.
While controversial, the measures have dramatically slashed the
outflow of dollars from the South American nation. One measure of
capital flight tracked by the central bank showed that $1.97 billion
left the country in the second quarter, down sharply from $6.13
billion in the second quarter of 2011.
But in some ways the controls have been self defeating by undermining
confidence in the peso and the government's economic policies.
For some middle-class Argentines, the measures bring back memories of
the forced conversion of their dollar savings into pesos during a deep
economic crisis in 2002.
Argentines have long viewed U.S. dollars as a safe haven in times of
economic uncertainty because of their country's long history of high
inflation and runaway government spending, which frequently ended in
currency devaluations.
The peso weakened to close at ARS4.6265 to the U.S. dollar on the MAE
foreign-exchange wholesale market Friday, compared with ARS4.6165
Thursday.
On the black market, residents desperate to get their hands on dollars
were paying around ARS6.40, according to financial newspaper El
Cronista.
Write to Ken Parks at ken.parks@dowjones.com
(END) Dow Jones Newswires
August 24, 2012 17:20 ET (21:20 GMT)
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