Dollar deposits at Argentine banks shrank 7 per cent last week, according to central bank data released on Friday, falling more sharply than the previous week as jitters persisted after the government imposed currency controls to stem capital flight.
Dollar deposits fell to $14.3 billion from Nov. 7 to Nov. 11, while deposits in Argentine pesos grew 0.19 per cent to total 417.76 billion pesos (roughly $98 billion), the central bank said.
The central bank’s vice president, Miguel Pesce, said dollar withdrawals slowed sharply this week, however. Official data will not be available until Friday, Nov. 25.
“There was a significant deceleration in withdrawals, which were minimal toward the end of the week, indicating the scenario is improving,” Pesce told state news agency Telam.
Gustavo Ber, a market analyst, added: “There was no justification for the magnitude of withdrawals we saw in the first days or weeks (after the controls were imposed).”
Other analysts say that while the withdrawals pose no great risk to the banking system, they do reduce liquidity and tend to push interest rates up, which could eventually cool consumer spending in one of Latin America’s fastest-growing economies.
President Cristina Fernandez’s government late last month ordered that all foreign currency purchases be pre-approved by the tax agency, in a bid to slow demand for greenbacks, protect foreign reserves and fight tax evasion.
Argentines often seek refuge in the dollar and many investors, big and small, expected the government to allow the peso currency to depreciate at a faster rate in the aftermath of the Oct. 23 election, in which Fernandez won a second term.
The central bank spent hundreds of millions of dollars on the formal foreign exchange market to stem the peso’s slide before the election. Its reserves have fallen to about $46 billion from a record of $52.7 billion in January.