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Argentines stashing US dollars at home as peso fails yet again
NO SOONER does she receive her paycheque in Argentine pesos than 43-year-old lawyer Eugenia exchanges them for US dollars and takes them home to hide away.
The fear of losing everything in a burglary pales in comparison with the mistrust she has for banks and her own country's currency.
"I don't trust the peso; it's not just now, it's always been that way," she said.
Bludgeoned by an eighth major financial crisis since 1950, many Argentines prefer to seek refuge in the US dollar as a form of savings they can hide "under the mattress".
There is nothing new about this mistrust.
"Historically, things didn't go well for those who tried to save in pesos," said Matias Rajnerman, chief economist at consultants Ecolatina. "Those who did so in dollars, did well. It's the consequence of a broken financial system."
For 18 months, Argentina has been in a recession provoked by a currency collapse.
The poverty rate in the country of 44 million is more than 40 per cent, inflation is around 55 per cent and unemployment has risen over 10 per cent. The economy shrunk by 3.1 per cent in 2019, and Argentine debt is more than 90 per cent of GDP.
One of the country's major problems is its citizens' mistrust of the peso, which has deprived the government of much-needed US dollars.
When the new government of centre-left Peronist Alberto Fernandez came to power, it moved to combat currency flight by slapping a 30 per cent tariff on foreign currency purchases and maintaining the previous government's purchase cap of US$200 per month.
Mr Fernandez's measures appear to be working, as the peso has stabilised at 63 to the dollar. The exchange rate was 18 to the dollar before the currency crash. The peso had lost almost 40 per cent of its value in 2019, after losing more than 50 percent in 2018.
However, a black market exchange, with a rate of 83 to the dollar, has seen a surge in transactions due to the monthly limit on purchasing dollars.
But experts say it is unlikely that Argentine faith in the peso will grow.
"In this country, there's a systematic history of violating the saver's legal security," said Mr Rajnerman. "Private savings end up being seized by the government or exchanged into bonds. It happened several times, it happened in 2001."
That was the year then-president Fernando de la Rua limited Argentines to withdrawing 250 pesos (then worth about US$250) a week from banks. Since then, many Argentines have hoarded their US dollars outside the country.
However the government plans to increase taxes on personal and foreign assets, while also imposing tariffs on those who take their savings out of Argentina.
According to the country's central bank, Argentines are holding US$300 billion of savings in foreign accounts in the United States and Switzerland, among other places.
But economists say this dollar flight causes a vicious circle. "If we keep dollars under the mattress or take them out of the country, it reduces the financial system... and that makes it difficult to turn things around," said Mr Rajnerman.
The desperation to escape from government controls, taxes and the banks has led many Argentines to emigrate, despite their country being one of the richest in the world in terms of natural resources. AFP