Argentines pulled US$1 billion from bank accounts in April rush

Argentines withdrew over US$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 US$16.4 billion on March 20 to just below US$15.3 billion by the end of April, a 6.7 percent decline, according to Central Bank data released Friday. In Argentina, checking or current 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 percent and dwindling dollar reserves at Argentina’s Central Bank renewed a peso sell-off 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 percent against the greenback last month. It’s down 30 percent 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.