Bloomberg — Argentines withdrew over $1 billion of US dollar deposits from the banking system from late March to the end of April as speculation spread about a potential currency devaluation in the official exchange rate.
Dollar deposits dropped from nearly $16.4 billion on March 20 to just below $15.3 billion by the end of April, a 6.7% decline, according to central bank data released Friday. In Argentina, checking accounts are denominated in pesos but savings accounts can be denominated in US dollars, a reality after decades of currency crises and runaway inflation.
Annual inflation charging over 100% and dwindling dollar reserves at Argentina’s central bank renewed a peso selloff in April in parallel currency markets. While the official exchange rate is controlled by the government, the peso’s free floating parallel rates lost about 13% against the greenback last month. It’s down 30% so far this year, by far the biggest decline in main emerging markets.
Economic volatility in Argentina is playing out before a presidential election in October and most economists see a currency devaluation on the official exchange rate all but inevitable.
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