Tuesday, November 12, 2019
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ECONOMY | 31-10-2019 22:10

Central Bank tightens 'cepo,' sets US$50 limit on cash advances on card abroad

The move comes three days after the Central Bank sharply tightened currency exchange controls to stem a surge in capital flight.

The Central Bank tightened the so-called 'cepo cambiario' this afternoon and set a US$50 limit on cash advances on cards made outside the country.

The institution said in a statement that the new rule would only limit operations on cards abroad that advanced cash. Peculiarly, there is no limit on the number of daily operations an individual can carry out – i.e. US$50 can be advanced as many times as requested.

"It is a measure that seeks to prevent local restrictions from being circumvented," sources at the bank told La Nacion.

The move comes three days after the Central Bank sharply tightened currency exchange controls to stem a surge in capital flight.

Through Communication "A 6823," the monetary authority also said that banks and local card issuers "must have the prior approval of the Central Bank to make payments abroad for the use of credit, debit or prepaid cards issued in the country from November 1 inclusive."

The rule applies to operations related to participation in gambling and betting, foreign exchange and cryptocurrency operations and the transfer of funds to investment accounts for investment managers located abroad, the Noticias Argentinas news agency reported.

On Monday, the Central Bank began restricting dollar purchases by savers to buy just US$200 per month. The bank initially imposed exchange controls in September, limiting dollar purchases by individuals to $10,000 a month.

Central Bank President Guido Sandleris said this week that Argentina's international reserves have plummeted by US$22 billion dollars since the August PASO primaries.

He told a press conference on Monday that the bank decided to further tighten exchange controls this week after noting "an important demand for dollars" last week.

"Faced with the risk that this would continue this week, we decided to deepen the controls," he said.

Earlier this week, the Central Bank lowered the floor of its key interest rate to 63 percent for the whole of November, from a minimum of 68 percent in October. The institution also said allow the monetary base to grow 2.5 percent next month, in line with the growth of October and September.

"This measure aims to preserve international reserves and allow the new government to have more degrees of freedom for the design and implementation of its economic policies," the bank's committee said in a statement.

– TIMES/NA

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