Argentina Seeks to Strengthen Peso With Amnesty Plan, Piano Says

Argentina’s Secretary of Interior Commerce Guillermo Moreno wants to strengthen the black market rate using new dollar securities the government plans to issue locally as part of a tax amnesty plan, according to Alfredo Piano, Chairman of Banco Piano SA.

The Argentine government this week asked holders of undeclared dollars to bring the funds into the country free of taxes in exchange for a 2016 bond that yields 4 percent, certificate of deposits to invest in real estate and promissory notes. Economy Minister Hernan Lorenzino will speak to senators today in Congress about the plan.

Moreno, who is responsible for setting price caps and import controls, wants the supply of dollars from the promissory notes to bring the rate in the illegal market down to 6.5 pesos per dollar from the current 10.2 pesos per dollar, Piano said in an interview today on Radio La Red. Argentines will be able to buy the promissory notes with pesos and cash them in at banks, Piano said, without providing additional details.

“He’s convinced this will make the rate drop to 6.5; I think that’s a bit exaggerated,” Piano said, citing a meeting with Moreno yesterday, according to audio of the interview on Radio La Red’s website. “This measure will undoubtedly cool the market.”

A press official for Moreno didn’t immediately return an e-mail seeking to confirm the meeting or government plans to strengthen the black market rate.

The dollar in the black market has weakened 33.5 percent this year and was double the official rate of 5.2175 pesos per dollar yesterday. Access to dollars at the official rate is restricted to Argentines because they are banned from buying foreign exchange for savings.

‘Pay Anything’

The black market rate rallied 2.4 percent to 10.20 per dollar at 12:39 p.m. in Buenos Aires from a record low of 10.45 yesterday, according to Ambito.com.

“We have to be optimistic, or else we are screwed,” Piano said, in reference to government measures to boost the supply of dollars. “There are people willing to pay anything for a dollar, which is why it’s at 10, it’s probably going to strengthen.”

The spread with the rates widened after President Cristina Fernandez de Kirchner on March 18 increased a tax to make foreign exchange purchases with bank cards to 20 percent from 15 percent.

Fernandez has tightened restrictions in the currency market since her October 2011 re-election to curb capital flight and to preserve reserves used to pay foreign debt. Central bank reserves have fallen 9 percent this year to $39.3 billion, the lowest level since May 2007.

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