BUENOS AIRES--The president of Argentina's central bank has affirmed the government's policy of eliminating the U.S. dollar as a transaction and savings medium in the South American economy.
"De-dollarizing the economy is a challenge" and Argentines "have to save in local currency like [people] do everywhere else in the world," Mercedes Marco del Pont said in a speech late Friday night.
Argentines have long viewed the U.S. currency as a haven in times of economic uncertainty because of their country's long history of high inflation and periodic devaluations.
Mrs. Marco del Pont wants Argentines to save in pesos amid a backdrop of one of the highest rates of inflation in the Americas. Annual inflation, which most economists say hovers around 25%, has eroded faith in the peso and fueled demand for dollars.
The interest rates banks pay on deposits are well below inflation. The government's data--which has been widely criticized by economists and the International Monetary Fund--put 12- month inflation at 10% in August.
President Cristina Kirchner and her ministers regularly defend the integrity of official data. Economists blame high inflation on loose fiscal and monetary policy, including the Kirchner administration's increasing dependence on the central bank as a source of financing.
Mrs. Marco del Pont said expanding the money supply to fund the government doesn't always lead to higher inflation. Since late October 2011, the government has severely restricted the public's access to the foreign-exchange market to stop capital flight that was slowly draining the central bank's international reserves.
The currency controls have dented economic activity, especially in the real estate sector where most transactions were done overwhelmingly in dollars. Property sales in the capital city Bueno Aires plunged 35% on the year in August.
August marked the ninth consecutive year-on-year drop in home sales and the longest sustained decline since the 2008- 09 global financial crisis pushed much of the world into recession.
Argentines have also pulled almost $7 billion in foreign-currency deposits out of the banking system in the last 11 months.
Mrs. Kirchner has defended her exchange rate policies in recent weeks, saying the controls are necessary so Argentina has enough hard currency on hand to pay government creditors and to buy vital imports.
Mrs. Kirchner blames speculators and special interest groups, not inflation, for provoking capital flight.
nasdaq.com
"De-dollarizing the economy is a challenge" and Argentines "have to save in local currency like [people] do everywhere else in the world," Mercedes Marco del Pont said in a speech late Friday night.
Argentines have long viewed the U.S. currency as a haven in times of economic uncertainty because of their country's long history of high inflation and periodic devaluations.
Mrs. Marco del Pont wants Argentines to save in pesos amid a backdrop of one of the highest rates of inflation in the Americas. Annual inflation, which most economists say hovers around 25%, has eroded faith in the peso and fueled demand for dollars.
The interest rates banks pay on deposits are well below inflation. The government's data--which has been widely criticized by economists and the International Monetary Fund--put 12- month inflation at 10% in August.
President Cristina Kirchner and her ministers regularly defend the integrity of official data. Economists blame high inflation on loose fiscal and monetary policy, including the Kirchner administration's increasing dependence on the central bank as a source of financing.
Mrs. Marco del Pont said expanding the money supply to fund the government doesn't always lead to higher inflation. Since late October 2011, the government has severely restricted the public's access to the foreign-exchange market to stop capital flight that was slowly draining the central bank's international reserves.
The currency controls have dented economic activity, especially in the real estate sector where most transactions were done overwhelmingly in dollars. Property sales in the capital city Bueno Aires plunged 35% on the year in August.
August marked the ninth consecutive year-on-year drop in home sales and the longest sustained decline since the 2008- 09 global financial crisis pushed much of the world into recession.
Argentines have also pulled almost $7 billion in foreign-currency deposits out of the banking system in the last 11 months.
Mrs. Kirchner has defended her exchange rate policies in recent weeks, saying the controls are necessary so Argentina has enough hard currency on hand to pay government creditors and to buy vital imports.
Mrs. Kirchner blames speculators and special interest groups, not inflation, for provoking capital flight.
nasdaq.com
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