Currency controls being eased

The topic everyone is talking about right now is of course the easing of the currency controls – “regular” citizens will be able to change more easily their money from pesos to dollars. There are still restrictions (you can for instance only change 20% of your monthly salary) but much less severe than they were; it was basically impossible for normal people to exchange legally, and therefore, the dollar reached new record highs on the black market (the blue dollar, as it is called here) – it was at 13 pesos to the dollar on Thursday. The official peso to dollar rate also jumped Thursday, climbing to over 8.

Bloomberg explains: “Argentina scrapped some of its currency controls a day after devaluing the peso as policy makers sought to stem a financial crisis and restore investor confidence by reversing measures that drove foreign reserves to a seven-year low.”

This of course means prices are going up, another articles shows that prices on all sorts of goods, from fridges to wine, are being marked up.

There is lots of uncertaintyof what will happen but I do believe it is a step in the right direction – the losening of the currency controls had to happen at some point, and better sooner than later. If they are completely let go of, the dollar will eventually stabilize somewhere between the official and the blue. The dollar reserves will go down even more but it was happening anyway, just at a slower rate.

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