trending Market Intelligence /marketintelligence/en/news-insights/trending/mFmA3ZOtAPM-266URIfqVQ2 content esgSubNav
In This List

Argentine assets fall after Macri reintroduces capital controls

Podcast

Street Talk Episode 87

Blog

A New Dawn for European Bank M&A Top 5 Trends

Blog

Insight Weekly: US banks' loan growth; record share buybacks; utility M&A outlook

Blog

Banking Essentials Newsletter 2021: December Edition


Argentine assets fall after Macri reintroduces capital controls

Argentine assets, including sovereign bonds, fell sharply Sept. 2 after the government reintroduced capital controls to help stem the local currency's decline.

In a decree published in the government's Sept. 1 official bulletin, President Mauricio Macri's administration said companies will need approval from Banco Central de la República Argentina to sell pesos for foreign currency purchases or foreign transfers. Individuals who wish to buy more than $10,000 in a month will also require the central bank's permission.

"The executive branch needed to adopt a series of extraordinary measures aimed at ensuring the normal functioning of the economy," the government said, adding that the directives will remain in effect until the end of 2019.

Macri's government lifted currency controls and other protectionist policies in 2015 shortly after he started his presidential term. Eliminating the restrictions was one of Macri's key campaign pledges.

Argentina's benchmark international 2028 dollar bonds declined by more than 2 cents to a record low of 36.58 cents, according to Refinitiv data, as bonds due in 2038 posted comparable losses.

The country's euro-denominated sovereign bonds were also hit, with the 2022 bond declining by 10 cents to 34.45 cents and the 2027 bond falling 7.2 cents to 33.501 cents, according to Refinitiv data.

Meanwhile, the American depositary receipts of Argentine lenders Banco Macro SA and Grupo Financiero Galicia SA also dropped in early trading.

Shortly after the government's currency control announcement, a spokesman for the International Monetary Fund said the agency's staff are examining Argentina's "capital flow management measures with the aim of protecting exchange rate stability and the savers."

"Staff will remain in close contact with the authorities in the period ahead and the Fund will continue to stand with Argentina during these challenging times," the spokesman said.

Turmoil and volatility in Latin America's third-largest economy have been on the rise since Aug. 11, when opposition candidate Alberto Fernández defeated Macri in primary elections by a wider-than-expected margin. Former Argentine President Cristina Fernández de Kirchner is Alberto Fernández's running mate in general elections scheduled for Oct. 27.

Fitch Ratings, Moody's and DBRS all downgraded Argentina in late August after the country unilaterally extended the maturity of its short-term debt. Financial markets reacted negatively to that decision, too.

The peso, meanwhile, has lost more than a third of its value so far in 2019 after dropping more than 50% last year.

As of Aug. 30, US$1 was equivalent to 59.31 Argentine pesos.