Argentines Are Starting to Pull Dollar Savings from Banks

Argentines, scarred from decades of economic booms and busts, are beginning to withdraw dollar deposits held at local banks after the latest round of measures to tighten capital controls, according to the first publicly available data.

About $205 million, or 2% of total dollar deposits under $1 million, were withdrawn in the three days after the central bank ramped up controls on Sept. 15 to make it harder and more expensive to buy greenbacks through official channels, according to data published by the central bank.

The numbers underscore the jitters felt by retail savers who have been converting their pesos into dollars on speculation that the local currency is headed for a larger devaluation. While still too early to point to a definitive trend, the data suggests that savers are now choosing to hold the physical dollars versus keeping them at the bank on concern that more severe restrictions could be on the way. The government has sought to reassure citizens.

“All dollar deposits within the Central Bank’s reserves are guaranteed for savers,” deputy cabinet chief Cecilia Todesca said in an interview on local radio. “As if they were in a separate box.”

Argentines Are Starting to Pull Dollar Savings from Banks

A central bank official who asked not to be named said that authorities are concerned about rumors that are creating uncertainty among savers. All bank entities are working as regularly as social distancing measures allow, the person added, and access to deposits remains available.

Those who choose to take physical dollars from the bank must request an appointment online, a measure implemented to encourage social distancing measures because of the coronavirus pandemic which is now working to mitigate the velocity of withdrawals. Argentines are allowed to hold peso and dollar bank accounts locally.

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“We’re seeing that this outflow of dollars from saving accounts is picking up, and we believe it will continue,” Emiliano Anselmi, an economist at Portfolio Personal Inversiones in Buenos Aires, said in a phone interview. “However, the system has record liquidity to respond.”

Still fresh in the memories of many Argentines is the 2001-2002 economic crisis which saw the government abandon a 1-to-1 peg with the dollar, default on its debt, freeze withdrawals and forcibly convert savings into devalued pesos. There are currently $9.65 billion worth of deposits by retail clients, which is defined by having less than $1 million in an account, and $17 billion of total deposits. And this time around, banks have 88% of private sector deposits held in cash or other reserve requirements at the Central Bank, which means they have over $15 billion to respond to dollar demand.

Since the measures were put in place, Argentines have been finding it impossible to buy dollars through official channels. Last week, the government slapped a new 35% tax on dollar purchases, on top of a separate pre-existing 30% levy, in an attempt to preserve hard currency.

Most of the country’s major retail banks have notices on their websites saying foreign-exchange transactions can’t be completed because their systems must be updated to account for the new rules.

Buying dollars via bank websites won’t happen until at least October, said Claudio Cesario, the president of the Argentine Banking Association on Tuesday in a radio interview. He said banks are looking at possibly selling dollars through scheduled appointments.

©2020 Bloomberg L.P.

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