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ECONOMY | 23-08-2022 21:23

Argentines withdraw US$1 billion from bank accounts amid turmoil

More than US$1 billion of dollar deposits have been withdrawn since former economy minister Martín Guzmán resigned in July.

Argentines have withdrawn just over US$1 billion in dollar deposits from the country's banking system over the past seven weeks as the government struggles to convince them the currency will stabilise.

Savers began withdrawing their dollars from bank accounts at a dizzying pace when former economy minister Martín Guzmán resigned on July 2, plunging the government deeper into crisis. Upon his arrival in office, Sergio Massa, Argentina’s third economy minister in two months, enjoyed a brief market rally before deposits fell again.

While some dollar deposits make up a part of Argentina's foreign reserves, which are also declining, they are not considered part of the Central Bank's net reserves because they generally cannot be spent to prop up the currency.

As of August 16, total deposits had fallen to US$14.55 billion, according to Central Bank data, less than half the peak level of around US$32 billion seen in 2019 before a primary vote indicated President Alberto Fernández would win the election. Between that vote and the Peronist leader’s inauguration, Argentines withdrew several billion dollars in deposits.

Deposits provide a near real-time pulse of Argentines' economic expectations. In late 2001, during one of the country's worst crises, the government banned large ATM cash machine withdrawals, which helped fuel social chaos.

by Patrick Gillespie, Bloomberg

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