Update February 10, 2015:
Last week Wednesday, the Central Bank froze imports completely by stopping the sale of dollars to importers and banks. There are currently shipments from every industry including automobiles and parts literally sitting at the border unable to enter the country.
Banco Central de Argentina (BCRA) President Alejandro Vanoli is using the measure to counteract pressure on Argentina’s reserves. The freeze bolstered the reserves by US $63 million on Wednesday, US $70 million on Thursday, and US $46 million on Friday, but the net result for the week was still negative with a loss of US $175 million, according to Clarin.
The measure is unsustainable unless we really do want #Argenzuela to become a thing, and could negatively impact importers’ relationships with their foreign counterparts, who are incurring heavy losses while the goods remain unpaid and outside the country.
The situation is expected to continue at least until February 16, when another tranche of money from China is expected to come through, as well proceeds from the YPF dollar bond sales.
Argentina has had an archaic, non-automatic import approval process since 2011 when the official and “blue” currency rates diverged, giving the Central Bank a quick fix way to slam on the brakes when reserves run low. The year started with reserves over US $31 billion, but this was thanks to the yuan-peso swap organized with China rather than strong fundamentals. The reality is that Argentina’s most consistent access to foreign currency and indeed engine of growth is resources, a sector that is currently experiencing the lowest prices in 12 years.
This is a short term measure to shore up dwindling reserves at the expense of the real economy. I just hope you hoarded tampons while you had the chance.