As recently as last week, US President Barack Obama was calling for Argentina to repair its relationship with the IMF. The country mainly borrows money from its national pension fund, which it nationalized in 2008, alongside the central monetary authority. Lenders typically require their repayments in an international currency.
At the end of May, the tax office (AFIP) introduced a series of hoops that residents will have to jump through in order to travel abroad with foreign currency, in an attempt to keep dollars in the country. Argentines are finding that everyday requests to change pesos into dollars, which AFIP also needs to approve, are also being refused. This follows controls in April that stopped peso account holders from withdrawing money from their Argentine bank accounts using debit cards overseas.
The new rules, which are meant to be temporary, have caused uproar among the country’s mostly anti-government news channels. But the protests, which have seen small but noisy groups taking to the streets of the capital’s wealthier suburbs, as well as cities such as Mendoza, Rosario, and Tucumán, show just how deep-seated and complex Argentina’s relationship with the US dollar remains.
A long history of economic mismanagement has done nothing to quell unease in the domestic currency, starting with the mega-devaluation of the 1970s known as ‘el Rodrigazo’ through to the corralito of 2001, an economic meltdown which saw bank accounts frozen and life savings held in dollar accounts suddenly converted into heavily devalued pesos.
Since the 1990s, the peso had been pegged to the dollar. At the time it was easy to change local money into dollars because the value was the same, and people started saving in foreign currency, anticipating another downturn in fortunes.