BUENOS AIRES (Dow Jones)–Argentines continued to pull U.S. dollar deposits out of the banking system during the week ending Nov. 18, though at a slower pace than was observed in the days after the government started to restrict foreign-exchange purchases last month.
Foreign currency-denominated deposits fell 4.5% on the week to $13.67 billion as of Nov. 18, the central bank said in a statement.
But deposit flight has started to wane, with about $640 million in deposits leaving banks during the week in question, down from nearly $1.1 billion the previous week.
About $2.4 billion in foreign currency deposits, the vast bulk of which are U.S. dollars, left the banking system in the three weeks after the government imposed new foreign-exchange controls on Oct. 31.
Meanwhile, peso deposits rose less than 1% on the week to ARS419.26 billion ($98 billion) on Nov. 18, led by growth in checking accounts and time deposits with maturities of between 90 and 179 days.
The deposit outflow was triggered by the government’s surprise move to require businesses and individuals to receive authorization from the tax agency before purchasing foreign currency.
The government says they’re aimed at attacking money laundering and tax evasion, but economists say the restrictions are really designed to counter a surge in capital flight that has taken a toll on central-bank reserves.
Reserves have fallen to $46.07 billion from around $52 billion in early August.
Capital flight was $9.8 billion during the first half and is thought to have accelerated in recent months as investors bet that annual inflation of more than 20% will eventually force President Cristina Kirchner to weaken the peso at a swifter pace than has been the case so far.
-By Shane Romig, Dow Jones Newswires; 54-11-4103-6738; shane.romig@dowjones.com
Source: http://online.wsj.com