Fearful Argentines Pull Dollars From Banks After Election Shock

(Bloomberg) --

Argentines have been withdrawing dollars from banks and keeping them at home since President Mauricio Macri’s defeat in a key primary election sent the peso tumbling.

Savers pulled more than $700 million from their dollar-denominated accounts on Monday and Tuesday alone, according to the most recent official data. That’s equivalent to 2.3% of total dollar deposits in the financial system. It was also the largest two-day withdrawal in percentage terms in more than five years.

Long used to currency crises, many Argentines are still traumatized by the so-called corralito -- economic measures to stop a 2001 bank run that effectively froze bank accounts and halted dollar withdrawals.

Those dollars are considered part of the central bank’s gross foreign reserves, and the withdrawals help explain why reserves dropped by $2.6 billion this week, to $63.7 billion.

Argentine Central Bank Revamps Strategy to Defend Peso

Foreign reserves are also falling because policy makers are selling dollars to shore up the peso -- so far this week, $503 million were used in currency market interventions. Argentina on Friday is expected to use an additional $500 million from its reserves to pay maturing Treasury bills known as Letes.

©2019 Bloomberg L.P.