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The future of the “clamp” on currency trade

From The Essential

By | [email protected] | June 13, 2020 11:00am

Argentina Central Bank Seeks to Cut Rates and Slow InflationMiguel Pesce, president of Argentina's central bank, speaks during an interview in Buenos Aires, Argentina, on Wednesday, Jan. 8, 2020. Argentina's new central bank president pledged to further cut interest rates to boost a free-falling economy while fighting inflation through a "social pact" that would encourage companies to raise production rather than prices. Photographer: Maria Amasanti/Bloomberg

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As it happened several times throughout its history, Argentina’s foreign sector has gotten more complex than foreign watchers might be used to, with the return to a multiple exchange rate regime that is a rarity elsewhere in the world. With the “clamp” reinstated in September and the 30 percent “solidarity tax” on currency purchases created in December, the economy is back in a situation where a dollar is bought at 67 pesos for import purposes but the price is much higher if the buyer simply intends to save.

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