Argentines made massive withdrawals from their bank accounts

Argentina Economy

Argentine citizens withdrew more than $1 billion in deposits from the banking system from late March to late April amid rumors of currency devaluation at the official exchange rate.

According to Central Bank data released on Friday, dollar deposits fell from nearly $16.4 billion on March 20 to just under $15.3 billion at the end of April, a 6.7% drop.

By the way, in Argentina, checking accounts are denominated in pesos, but savings accounts may be denominated in US dollars. A reality after decades of currency crises and dizzying inflation.

Argentines withdrew more than a billion dollars from the banking system

Indeed, in a context of uncertainty and volatility, the Argentines made massive withdrawals. As speculation spread about a possible devaluation of the currency in the official exchange rate.

Specifically, given annual inflation that exceeds 100%  and the decline in dollar reserves at the Central Bank, a massive sale of pesos was revived in April in parallel currency markets. Although the official exchange rate is controlled by the government, the parallel free-floating rates of the peso lost around 13% against the dollar last month. It’s down 30% so far in 2023, by far the biggest drop in major emerging markets.

Now, this economic volatility in Argentina is taking place ahead of the presidential elections in October. As a consequence, most economists anticipate that a devaluation of the currency in the official exchange rate is almost inevitable.

Alberto Fernández blames the right for the devaluation of the peso

In fact, the president of Argentina, Alberto Fernández, affirmed that the devaluation of the Argentine peso against the dollar in the illegal market is a consequence of “a permanent practice of the right.” All this, facing the presidential elections in October.

« We are experiencing a global crisis that is being strengthened in Argentina, it is absolutely true. It is a permanent practice of the Argentine right ».

Therefore, the Minister of Economy, Sergio Massa, warned that the government is going to “use the Economic Criminal Justice as a vehicle for investigation and clarification of some behaviors. Likewise, to the Financial Information Unit and the National Securities Commission for the analysis of operations related to money laundering”.

Finally, is Argentina heading toward an inevitable devaluation? Leave your opinion in the comment box.

I close with this phrase from John Maynard Keynes: « The market can remain irrational, longer than you can remain solvent ».