BUENOS AIRES (Dow Jones)–Argentina’s top central banker said Monday that the outflow of U.S. dollar deposits from the banking system observed in recent weeks should end within days.
About $1.76 billion in dollar deposits left the banking system in the two weeks after the government imposed new foreign exchange controls on Oct. 31, according to central bank data.
Speaking with reporters at the sidelines of a conference, Central Bank of Argentina President Mercedes Marco del Pont attributed the drop in deposits to the public’s misunderstanding of new foreign exchange controls.
Dollar deposit outflows have slowed and «we estimate that in the next few days it will converge with zero,» she said.
The foreign exchange controls have made it increasingly difficult for individuals and businesses to obtain dollars. The government says the measures are aimed at money laundering and tax evasion, while critics say the true intent is to stanch capital flight that is denting international reserves.
Marco del Pont said additional controls won’t be necessary.
The central bank has sold $150 million in dollars on the local exchange market to support the peso since Oct. 21, said Marco del Pont, who expects those dollar sales to drop to close to zero by the end of the month.
The central bank and other government organizations frequently intervene in the local exchange market to gradually weaken the peso versus the dollar to help exporters.
But inflation that is widely believed to be running above 20% a year has actually caused the peso to appreciate in real, or inflation-adjusted, terms.
The peso eased slightly to close at ARS4.2585 on the MAE local foreign-exchange wholesale market Monday, compared with ARS4.257 in the previous session.
Fears that a major depreciation of the peso might be in the works have fueled what are thought to be elevated levels of capital flight this year.
That capital flight has taken its toll on reserves, which have fallen to about $46 billion from $52 billion in August.
Argentina’s exchange rate remains competitive versus those of its trading partners, thanks to the central bank’s managed float of the peso, Marco del Pont said.
«Argentina has an exchange rate that guarantees growth and competitiveness,» she said.
-By Ken Parks, Dow Jones Newswires; 54-11-4103-6740; ken.parks@dowjones.com
Source: http://online.wsj.com