(Updates with economist comment in third paragraph.)
Feb. 8 (Bloomberg) -- Argentina limited the use of cash in the country’s financial markets as President Cristina Fernandez de Kirchner ramps up oversight of currency transactions.
The government will restrict daily cash transactions to 1,000 pesos ($231) per person, down from 10,000 pesos, according to a statement today in the Official Gazette. The measure affects activity in the stock and bond markets, investment funds and in the futures markets. Operations above the limit will have to be done through Argentine bank accounts that are authorized by the central bank.
“They are forcing a higher level of formality in the economy, as cash transactions allow more irregularities,” said Felipe Hernandez, an analyst at RBS Securities Inc. in Stamford, Connecticut. “This is in line with other measures to prevent money laundering, for which the government has been under a great deal of pressure.”
The move is aimed at combating money laundering and terrorist financing, according to the statement.
Since winning a second, four-year term in October, Fernandez has ordered the tax agency to review all foreign currency transactions, required pre-approval for the importation of goods and raised capital requirements on banks in a bid to limit dividends and slow capital flight.
Outflows totaled $18 billion in the first nine months of 2011, double the same period in the previous year, and accelerated to the fastest pace in at least a decade in the third quarter. Fernandez’s measures have slowed outflows, allowing the central bank to rebuild its international reserves.
--Editors: Richard Jarvie, Harry Maurer
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