MEXICO CITY, Jan. 15, 2020 /PRNewswire/ -- Given its wealth of natural resources and abundance of fertile land, Argentina should have continued to prosper and remain among the richest countries in the world, as it was in the early part of the 20th century. Instead, Latin America's third-largest economy started on a downward spiral in the 1950s, suffering a recession every three years during the following six decades. When the Argentine peso plunged by roughly 30% after pro-business President Mauricio Macri suffered a sound defeat in the primaries, the country's central bank imposed capital controls in a bid to "maintain currency stability," among other things. "It is somewhat ironic that Macri assumed power in 2015 with such restrictions in place and proceeded to abolish them but will vacate the office with the same measures in effect. The problem is that limits on currency purchases are a temporary solution, and Argentina's new government will have to address the deep-rooted economic issues of the country if the peso is to regain any meaningful measure of stability," notes acclaimed forex broker Pablo Soria de Lachica.
The victory of left-leaning Alberto Fernandez in the primary presidential elections in August rattled Argentina's bond, equity, and currency markets, and the massive drop in the value of the peso left government officials with a choice between allowing its free fall or imposing capital controls to achieve some stability. Opting for the latter, the central bank announced at the start of September 2019 that individuals would be allowed to buy a maximum of $10,000 per month while companies would need permission to access forex markets to buy foreign currency and make cross-border transfers.
The extraordinary measures, have had some success in decelerating the fall of the peso, but they are likely to provide only a near-term respite, Pablo Soria de Lachica explains. One of the central bank's primary objectives was to protect the national currency by stemming the outflow of its foreign reserves and thus minimize the risk of another default. However, alleviating the immediate pressure on the peso has not been able to prevent the decline in forex reserves by more than $20 billion between early September and late October. As Pablo Soria de Lachica points out, "Capital controls alone will not be enough to repair the currency of a country which ended the first half of 2019 with inflation of 22% and whose economy is expected to contract further after a 2.5% decline in 2018. Moreover, such measures could prove counter-productive if kept in place for an extended period of time because they are detrimental to investment, especially foreign direct investment. Nevertheless, even a temporary relief could help the government address the most pressing issues and potentially set the country on a path to improvement."
Pablo Soria de Lachica graduated from Universidad Tecnologico de Mexico (UNITEC) with an MBA, going on to specialize in international trading and ultimately become one of the most prominent forex experts globally. His extensive experience allows him to maximize profits for his clients by combining professional guidance and educational projects. He is currently collaborating with Kartoshka - a company bringing the latest technologies in sales, telemarketing, and customer support.
Pablo Soria de Lachica - Foreign Exchange Specialist: http://PabloSoriaDeLachicaNews.com
Pablo Soria de Lachica Examines the Impact of Argentina's Presidential Elections on its National Currency: https://finance.yahoo.com/news/pablo-soria-lachica-examines-impact-031000360.html
Pablo Soria de Lachica Explains the Impact of Argentine Peso Devaluation: https://finance.yahoo.com/news/pablo-soria-lachica-explains-impact-191000044.html
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