Argentines drain reserves to stash dollars under mattresses

By Camila Russo and Charlie Devereux
Bloomberg News
Friday, February 8, 2014

Jorge Lischetti applied to purchase dollars from the government the day Argentina eased controls. He stashed the $300 he was allowed to buy in January in his Buenos Aires home and did the same on the first day of February.

Argentines like Lischetti, a 24-year-old legal adviser, are contributing to a drop in the country’s international reserves by refusing to deposit the dollars they purchase in local banks. More than 12 years after Argentina restricted withdrawals and converted dollar savings into pesos amid an economic crisis that led to a $95 billion default, 91 percent of those who qualify to buy foreign currency from the government are paying a 20 percent surcharge to keep the cash.

“History in Argentina is scary enough to make you want to keep your money out of the bank,” Lischetti said in an interview in the capital.

Argentines have applied to buy and take home $223 million since President Cristina Fernandez de Kirchner opened up dollar purchases Jan. 27, exacerbating a plunge in reserves already at a seven-year low of $27.8 billion. Argentina’s 19 percent devaluation last month and the easing of currency controls reflect Fernandez’s efforts to cool black market trading, where the peso is 36 percent cheaper than the official rate. ...

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