Similar to other emerging nations, Argentina is going through hard times with investors withdrawing their assets and political misbalance taking place in the country. All this triggered drastic consequences for the national currency. After a sharp fall of the Argentine peso, it faced the threat of record devaluation. Thus, in two days the peso lost 12 percent, which is a considerable decline. The situation worsened every day and required speedy measures. Last week, the government took drastic action lifting a ban on the purchase of the U.S. dollars it introduced in 2011. According to the new rules, monthly dollar savings cannot exceed $2,000. However, a more detailed look shows that there are far more limits. For example, AFIP (Argentine’s tax authority) indicated the category of citizens that are allowed to buy dollars. The lucky ones are those who earn over 7,200 pesos (or about 900 U.S. dollars) a month. Moreover, they can buy an amount that does not exceed 20 percent of their basic income and does not go beyond $2,000 a month. The fact that the government is keeping the tax on foreign exchange transactions unchanged is another administrative barrier to a free forex market. However, taxation can be avoided if the Argentines put the currency to a bank account right after purchasing. In this way, Argentine’s authorities plan to stop a sharp decline in the stockpile of dollar reserves, which is estimated at $29.2 billion, a seven-year low. In addition to a weakening peso, the reason was the country’s black forex market.
