Argentina president starts saving in pesos, not dollars

Agence France-Presse

Posted at Jun 08 2012 10:52 AM | Updated as of Jun 08 2012 07:03 PM

BUENOS AIRES - Argentine President Cristina Kirchner has said that she will close down her personal savings account in dollars and will convert the money to the embattled local currency, the peso.

Inflation is officially at 9.8 percent, but bankers widely believe it is closer to 25 percent -- and locals have been snapping up dollars to retain the value of their savings.

Argentina however has had no access to international markets since declaring a debt moratorium in 2001, so the country depends on its trade surplus -- and the precious dollars it generates -- as its main source of hard currency.

Kirchner's announcement on Wednesday, broadcast nationwide from the Casa Rosada, comes amid concerns over capital flight and low currency reserves.

Argentina's president did not say how much money she was moving into pesos. However the daily Clarin, citing government documents, says that Kirchner has bank accounts worth $3 million.

In the broadcast, Kirchner urged "friends, businessmen and government officials" to follower her example and save in pesos, which she claims is "more profitable" than dollars.

On Thursday, one dollar could buy 4.5 Argentine pesos.

In a bid to slow the outflow of capital that has put a dent in the country's foreign reserves, Kirchner's government created an Office of Financial Investigation in mid-November, just weeks after she was easily re-elected.

Any foreign currency purchases are now subject to approval by the AFIP tax collection agency consulted online by traders.

Economists in November estimated capital flight was close to $68 billion over the previous four years, including $22 billion in 2011 alone.

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