Argentines wait at banks to withdraw cash as currency controls kick in

Argentines wait at banks to withdraw cash as currency controls kick in

The government's u-turn means that it will restrict purchases of dollars and other foreign currencies in an attempt "maintain currency stability", the country's central bank said.

Accustomed to economic turmoil that has led to restrictions in accessing their savings in the past, Argentines are historically quick to opt out of banks and instead stash their cash at home at the first signs of a currency clampdown.

"We are in a gray area, and from Friday until today, it got darker".

Many were anxious about being blocked from withdrawing their money as was the case during Argentina's economic crisis in 2001.

In the 2001-2002 crisis, riots broke out, supermarkets were looted and angry depositors vandalized bank ATMs.

Macri's government and the central bank are trying to stabilise the economy as the October 27 presidential election looms, for which Fernandez is now the front-runner. "The game has changed for the foreign exchange market", said Sabrina Corujo, an analyst with Buenos Aires brokerage Portfolio Personal, warning local stocks and bonds were set to weaken as well.

The peso closed 5.39% higher at 55.98 per USA dollar, traders said, its strongest level in a week after a near record low close on Friday.

In a bid to calm market turbulence, last week Argentina asked the International Monetary Fund to restructure its debt payments on a US$56 billion bail-out loan agreed past year.

Currency controls were last put in place in Argentina by Macri's anti-investor predecessor, Cristina Fernández de Kirchner.

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Argentine bond prices fell to record lows on Monday in response, and the official and black market peso exchange rates diverged.

The central bank and the treasury on Sunday rolled out a series of restrictions for buying and transferring foreign currency overseas, as well as deadlines for converting dollar earnings from exports into pesos in order to increase the amount of dollars in the financial system and reduce outflows.

"The instability and the lack of information generate fear, and I think that many of us are acting because of that fear of not knowing what could happen", Pedace said.

But in unofficial trade, the currency dropped on Monday and posted a slimmer rise on Tuesday, taking the gap between the two prices to near 10%, according to data compiled by Reuters.

"As Macri's government runs out of options, it will most likely have to resort to very unpalatable measures that most adult Argentines hoped they would never experience again", said Emilio Ocampo, an independent economist and consultant.

Outside the banks, customers complained about the long lines and problems with digital banking systems that prevented them from making some online transactions on Monday.

According to central bank data, the deposit drain started even before the government announced the new currency controls.

Since Argentina held primary elections on August 11, the BCRA has sold some 2.038 billion dollars in reserves to shore up the national currency.

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