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UPDATE 1-Argentina's black market peso hits low as controls tightened
March 20, 2013 / 7:58 PM / 5 years ago

UPDATE 1-Argentina's black market peso hits low as controls tightened

BUENOS AIRES, March 20 (Reuters) - Argentina’s black market peso slid 5.5 percent to close at a record low against the dollar on Wednesday due to further government controls aimed at keeping dollars in the country, traders said.

The informal peso, which is measured by Reuters, ended at 8.70/8.75 per dollar, bringing the difference with the official exchange rate to 71.7 percent.

President Cristina Fernandez, who uses central bank foreign reserves to pay debt, imposed controls on foreign currency purchases soon after she won re-election in 2011 and they have been tightened considerably since then.

On Monday, her government hiked a levy on credit card purchases abroad by five percentage points to 20 percent and extended the measure to holiday packages paid for at home.

The credit card charge can be used as a tax credit to be deducted from income or wealth tax at the end of the year.

Argentines have long used the U.S. dollar as a refuge from economic uncertainty and high inflation at home. Markets have reacted mostly negatively to Fernandez’s interventionist policies and local dollar demand has grown in recent months.

Buying dollars and other foreign currency at the official exchange rate is virtually banned, forcing many to turn to the black market and pay a high premium over the official rate or pay the credit card levy to withdraw cash overseas.

The peso closed flat in official, interbank trade at 5.0950/5.0975 per dollar.

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