Banco de Intercambio, Argentina, 1980
Today, as expected, Argentina's leaders announced new measures meant to ease restrictions on dollar buying in the country, Clarin reports.
Now, Argentines making at least $900 a month or more will be able to buy dollars once again. The amount you can take out will be tiered according to how much you make, with the maximum rate of dollar buying set at $2,000 a month.
And they won't see that cash anywhere but on a bank balance sheet unless they want to pay a fee.
Newly purchased dollars will be taxed at 20% per year unless they are kept on deposit in the country for at least a year — a major incentive to save, and an attempt by the government to prevent capital from leaving the country.
Last week Argentina devalued its currency more than it has in 12 years, and the peso plunged 15%. Prices sky rocketed chaotically as the government placed the official official peso to dollar rate at 8 to 1, while the black market rate hit 13 pesos to the dollar.
Since then, the government has said that it is coming up with a plan to ease the country's 25% inflation rate — 25% according to independant, non-government numbers — and deregulate its currency markets. Easing restrictions on dollar-buying is supposed to be part of that deregulation.
Before these new measures, Argentines could only buy dollars in order to go on vacation. Anyone leaving the country had to apply to get those dollars by showing their earnings and their travel plan. The government would then decide how much money they should get.
What the government determined would often be so low travelers had no choice but to go to the black market.
Travelers will still go through that application process to get more dollars, and credit purchases made outside the country will remain taxed at 35%, said Cabinet Chief Jorge Capitanich.
So this is a slight easing of restrictions, but it's hardly revolutionary.
This new announcement was made in Cabinet Chief Jorge Capitanich's daily address. President Cristina Fernandez is currently at a meeting in Cuba. Capitanich also that the 8 peso to dollar government exchange rate is an "acceptable level."
So are these new measures going to cut it?
"Not at all," said Federico Zaldua, a bond trader at Argentine fund, SP. "It will take time to get where we need to be."
The upside here is that at this rate, major capital flight and total 2001-style chaos unlikely.
"Capital controls will ease but not much at 8 pesos per USD," says Zaldua. "The capital flight will be contained unless they really easy capital controls...The market just needs to operate freely and very sadly the price will be paid by those who earn a fixed salary."
Sounds like this could go on for a while.
More From Business Insider