Argentina to announce "lifting" of currency controls

Government of Argentina says it will announce desicion to loosen state controls on economy and allow local currency to weaken in hopes of increasing exports

Photo by: Reuters
Photo by: Reuters

Argentina's President Mauricio Macri waves after being sworn-in to office at the Argentine Congress in Buenos Aires, Argentina, December 10, 2015.

Argentina will announce a much anticipated relaxation of currency controls on Wednesday, the government said, setting the stage for a weakening of the local peso and an increase of soybean shipments from the world's No. 3 exporter.

President Mauricio Macri, elected last month and inaugurated on Thursday, has promised to loosen state controls on Latin America's No. 3 economy and allow the local currency to weaken in a bid to increase exports and spark economic growth.

"The lifting of currency controls will be announced" at a 6 pm (2100 GMT) press conference, the government statement said. It did not specify to what extent Economy Minister Alfonso Prat-Gay will announce freer access to US dollars.

Farmers in the grains-exporting powerhouse have been waiting for a currency devaluation before selling stockpiles of soybeans that had piled up under Argentina's previous leader Cristina Fernandez. Fernandez used central bank reserves to prop up the peso, a policy Macri has vowed to change.

Argentina's official peso was at 9.8225 per US dollar on Wednesday versus the much stronger black market rate of 14.43 per greenback.

Macri says he wants the two rates to converge. For that to happen he is expected to allow businesses and individuals freer access to U.S. dollars, which are preferred by savers seeking a safe haven from high inflation and financial volatility that has rocked Argentina in recent decades.

Most transactions in Argentina are already conducted at some point between the official and black market foreign exchange rates. To protect waning central bank reserves, Fernandez clamped down on access to U.S. currency through a set of controls known collectively as the "cepo".