Argentina tightening up capital controls

pmbug

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Argentina's attempt to work around SCOTUS decision in favor of the 'holdouts' was rejected (under anti-evasion orders) last night leaving Argentina no alternative but to threaten to default on its debt. The government called it "impossible" to pay bond service due on June 30, because payment to holders of restructured bonds could not be made unless the 'holdouts' were paid $1.33 billion at the same time (and Argentina's economy minister argues could be up to $15 bn) which the distressed country clearly does not have. ... it seems increasingly likely that an even of default looms for Argentina.
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http://www.zerohedge.com/news/2014-...negotiate-admits-next-bond-payment-impossible
 

DoChenRollingBearing

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...

I have now heard from one guy and read in another piece that Bitcoin is becoming popular in Argentina due to capital controls. Apparently there is a big premium to BTC price there vs. here.

Take enough, you could take that trip to Buenos Aires for free...
 

ancona

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Argentina can't afford to pay the hold-outs without raiding pensions to do so. They have the other small problem of the other debt holders that accepted huge haircuts as well. If the hold-outs get paid dollar for dollar, there will be a rush on their treasury by everyone else that will then feel ripped off. The lawsuits will be epic in scale.

It's just like Obama ripping off the Delphi workers and leaving them without a pe4nsion or any other benefits while he made the unions at GM whole. What a crock of shit.
 

pmbug

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I'm not finding any reports in media, but I'm hearing through the grapevine of relatives that they are currently "enjoying" a bank holiday down there. No one has access to their accounts. I'll post more if I'm able to confirm this via any media.

Edit: This must be it:
Bank workers’ union La Bancaria confirmed yesterday banks will not be open to the public today and tomorrow due to a strike over wage negotiations. It will be an atypical week, as the strike follows yesterday’s national holiday.

There were concerns yesterday that no banks for the first three days of the week meant a rising risk of long queues and a possible lack of cash at some ATM machines. The strike’s organizers said the protest will be uninterrupted, suggesting cash machines will not be restocked.
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http://www.buenosairesherald.com/article/190070/atms-may-run-out-of-cash
 

pmbug

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* bump *

Just a few weeks after Argentina became ground zero for the coming Emerging Market crisis, when its currency suddenly collapsed at the end of April amid soaring inflation, exploding capital outflows and a central bank that was far behind the curve (as in "13% of rate hikes in a week" behind)...

... the IMF has officially bailed out the country - again - this time with a $50 billion, 36-month stand-by loan, and coming in about $10 billion more than rumored earlier in the week, it was the largest ever bailout loan in IMF history, meant to help restore investor confidence in a nation that, between its soaring external debt and current account deficit, prompted JPMorgan to suggest that along with Turkey, Argentina is in effect, doomed.
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More: https://www.zerohedge.com/news/2018-06-07/argentina-bailed-out-biggest-ever-loan-imf-history

I had not really heard much about Argentina in my news radar for a good long time. Maybe I should have been paying more attention...
 

rblong2us

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So while the Fed pulls $ from the rest of the world, the IMF has no problem bailing out those suffering from the consequences with more $ ?

Theres a lot of speculation regarding how $ shortages are effecting emerging market economies and yet I read earlier that the actual amount the Fed had 'quantitavely tightened' was a very small number .........
suggesting that it is not possible to tighten and $ printing is actually the only option ?
 

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Argentina has hiked interest rates to 60% as it takes dramatic steps to restore confidence in its plunging currency,in the latest sign of turmoil among emerging market economies this year.

The Argentine central bank raised the cost of borrowing by 15 percentage points on Thursday in an attempt to shore up the peso, which has plummeted in value. The central bank said it would keep rates unchanged at 60% until at least December.

The peso dropped amid intense trading on foreign exchanges, falling by more than 10%, despite the bank’s rate move, in the most severe drop for the currency since it was floated in 2015. $1 (77p) is now worth about more than 39 pesos, having been worth about 18 pesos at the start of the year.

Paul Greer of the City fund manager Fidelity said countries across emerging markets were being targeted by investors due to their economic problems, including high levels of debt and imports. “There are no easy answers for Argentina to its current woes,” he said.
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Having approached the International Monetary Fund for emergency support amid an unfolding economic crisis, Argentina asked the Washington-based lender of last resort earlier this week to accelerate the release of the money to bolster its finances.

Argentina’s president, Mauricio Macri, has said a lack of trust from the markets had forced him to ask for help as the peso weakens and inflation runs at 30%.

The country has asked to borrow $50bn from the IMF to restore confidence in its finances amid high levels of government debt in dollars, which have become more expensive to pay off as the dollar strengthens. While the move was designed to soothe investor concerns, the effect has been the opposite in the financial markets, triggering concerns about the country’s ability to pay its debts.

Despite the massive increase for interest rates to 60% – by comparison the cost of borrowing is as low as 0.75% in the UK – economists said Argentina may still require further government action to bring the crisis under control.

Edward Glossop of the research consultancy Capital Economics said Buenos Aires would need to give more details about how it planned to meet the targets for tax and spending set by the IMF. Latin America’s third biggest economy is forecast to shrink this year, while borrowing has become harder for firms in the country amid higher interest rates.

“Maintaining investor confidence from here will require help from the government, which has been largely unconvincing over the past few weeks,” Glossop said.
https://www.theguardian.com/busines...-raises-interest-rates-to-60-to-shore-up-peso
 

pmbug

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In a televised address earlier this week, President Mauricio Macri declared an economic emergency and announced a dramatic new set of austerity measures in a desperate bid to convince the International Monetary Fund (IMF) to speed up the release of its previously agreed $50bn bailout loan - the largest in the IMF's history.

"What we have to face is a basic problem," Macri said, "which is that we cannot spend more than we have. This is not just another crisis. It has to be the last."

If Argentina's tumultuous economic history is anything to go by, however, this time is unlikely to be any different. In fact, Macri's keen embrace of the standard IMF recipe of far-reaching austerity only risks repeating the mistakes of the past - deepening the economic recession and leading to renewed social unrest, making further political turmoil all but inevitable.
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https://www.aljazeera.com/amp/indep...-painful-memories-crises-180907051253079.html
 

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Argentina's new central bank chief is considering raising reserve requirements and tightening how banks account for reserves to restrict money supply under a revised IMF deal signed this week with the aim of lowering inflation, local media reported on Friday.

Central bank Governor Guido Sandleris, appointed on Tuesday after his predecessor unexpectedly resigned, met with bank executives on Thursday to discuss raising reserve requirements but there is no date set for any announcement, newspapers Cronista and BAE reported, citing sources present in the meetings.

Sandleris announced on Wednesday that the central bank would target zero growth in the monetary base until June 2019 as part of the $57 billion financing deal with the International Monetary Fund, in addition to other measures to help stabilize consumer prices.

The central bank is also discussing a reduction in the amount of short-term debt, known as Lebac, allowed to replace hard cash in bank reserves, the reports said.

With interest rate increases by the U.S. Federal Reserve this year sucking dollars from emerging markets, Argentina has found itself at the center of a storm, as a drought unexpectedly tipped its economy into recession.

The peso has lost more than 50 percent of its value against the dollar this year as foreign investors fled amid concerns the government might be unable to service its debt next year.

Sandleris became central bank governor after his predecessor, Luis Caputo, resigned unexpectedly the day before the announcement of the revised financing agreement with IMF, the largest in the fund's history.
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https://www.cnbc.com/amp/2018/09/28...lling-rise-in-reserve-requirements-media.html

I imagine that it is not just coincidence that the former central bank governor quit the day before they reached a deal with the IMF. Argentina is deep in the (debt) shit.
 

pmbug

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The Argentine government under President Mauricio Macri will publish a decree that effectively prohibits private sector firings, Ambito Financiero reported Nov. 8.
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https://worldview.stratfor.com/situ...-government-complicate-private-sector-firings

Argentina is seeking a new currency swap deal with China that would add another 60 billion yuan (US$8.7 billion) to its reserves, as the Latin American nation tries to boost confidence in the peso amid an economic crisis in the region.
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https://www.scmp.com/news/china/dip...-new-currency-swap-deal-china-beijing-pursues
 

pmbug

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Since the IMF intervened, Argentina’s economy, heavily reliant on foreign, particularly dollar-denominated, funding is showing signs of improvement. The country’s current accounts are looking healthier and its central bank, the Banco Central de la Republica Argentina, seems to have a handle on its macroeconomic situation.

In late October, the IMF approved a loan expansion to $56.3 billion from $50 billion before, and said Argentina had passed its first economic performance review.

With the peso exchange rate still sitting at the lower range of the trading band that was agreed with the IMF, “we expect BCRA to buy dollar up to $150 million per day to avoid it dropping substantially below the band,” the analysts said.

The trading band was established to stem the peso’s aggressive selloff.
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https://www.marketwatch.com/story/a...ys-b-of-a-2018-11-09?siteid=yhoof2&yptr=yahoo

Oct. 26:
... So far, the Latin American country has drawn $20.4 billion. ...
https://www.marketwatch.com/story/imf-approves-argentina-loan-expansion-to-56-billion-2018-10-26

So worst case, ~$36B / .15B = 240 payments - roughly enough for 1/3 of a year. ~$9B from China would add another 60 possible payments - still less than a year of cash burn. It doesn't appear that Argentina is experiencing a worst case right now as the peso is overvalued according to the marketwatch article, but if the Fed keeps raising rates, that will put the pressure back on.
 

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Argentina assets tanked after a populist opposition candidate routed President Mauricio Macri in a shock primary election result.

The currency tumbled 15% to a record-low 53 per dollar, while the nation’s offshore notes collapsed, with the country’s 100-year bonds down almost 27% in New York to 54.66 cents on the dollar. Bond risk measured by five-year credit default swaps surged 808 basis points. An exchange-traded fund of Argentina stocks tumbled 22% in New York.

Opposition candidate Alberto Fernandez and his running mate, former President Cristina Fernandez de Kirchner, won by a much wider-than-expected margin over Macri, spooking investors who were already trimming exposure to Argentine assets as the Oct. 27 presidential election nears.
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More: https://www.bloomberg.com/news/arti...ll-off-in-argentina-after-macri-loses-primary

Seems like they are taking a step backwards.
 

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The IMF delegates, who arrived in Argentina on Saturday and immediately began meetings with policy makers, face a tricky choice with unwelcome echoes from two decades ago: risk making the turmoil even worse by withholding a $5.3 billion installment due next month -– or cough it up, even though the program’s future looks highly uncertain.
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https://www.bloomberg.com/news/arti...loan-in-danger-imf-officials-fly-to-argentina

Oh hey, I remember that can! I kicked it down the road a ways some time ago...
 

pmbug

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At midnight Saturday, after months of histrionics, the clock ran out on Argentina.

It had failed to put up the $500 million it owed foreign bondholders and, in so doing, had fallen into default for the ninth time in its history. It's a staggering number, putting the South American country in an elite league of serial defaulters that includes the likes of Ecuador, Uruguay and Turkey.
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https://www.bloomberg.com/news/phot...-defaults-the-argentine-debacles?srnd=premium

Well, it's not terribly surprising, is it? I wonder if this is going to trigger any CDS payouts.
 

rblong2us

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new financial distancing rules apply ..........

There was talk of letting the 3rd world debtor states off and zeroing their debt cos they cannot pay the loans back or even service them.

Would this trigger CDS payouts ? Well the ISDA is now a more robust organisation ( since Leahman) apparently, so no worries and the amount outstanding is small beer for the printers

Perhaps Tedros could get a job there once the WHO has dumped him.
Contagion is impossible but all money must be put in a place of safety (-;
 

pmbug

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Argentina will present an amended bond restructuring offer to U.S. regulators on Thursday or Friday, a source at the economy ministry told Reuters on Monday, as the government pushes forward with restructuring about $65 billion in sovereign debt.
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Argentina is facing a grim economic picture after defaulting on its sovereign bonds last month.

Gross domestic product is seen shrinking 9.5% in 2020, according to a poll of analysts by the central bank released on Friday, versus an estimated 7% decline in the bank's previous monthly survey, as activity gets walloped by a nationwide lockdown that started March 20 to fight the coronavirus pandemic.

Striking a bond restructuring deal is key for the country to avoid years of legal battles with creditors and a potential shutout from global capital markets, as happened after a major default by the crisis-prone country in 2001.

$65B is about the size of the Fed's weekly balance sheet expansion these days. Crazy times...
 
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