Capital Controls Installed in Argentina Highlight the Prowess of Bitcoin

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The move allows the central bank in Latin America's third largest economy to limit how much foreign currency companies can buy, and how much they can transfer overseas.

The Central Bank of Argentina has been selling off billions of dollars of reserves in an effort to halt a dramatic slide in the peso's value since Alberto Fernandez's success in pre-election primaries last month.

"Given various factors that impacted the evolution of the Argentine economy and the uncertainty in the financial markets, the executive branch needed to adopt a series of extraordinary measures aimed at ensuring the normal functioning of the economy, sustaining the level of activity and employment and protecting consumers", said the decree published in an official bulletin on Sunday.

The Argentine government imposed currency controls on Sunday amid an acute debt crisis that has battered the peso.

After opposition candidate Alberto Fernandez and Fernandez de Kirchner, who is now his vice presidential candidate, pulled off a stunning upset in the August 11 primary vote, bonds, stocks and the peso currency plummeted on market fears over a potential return to the interventionist policies of Fernandez de Kirchner's previous government.

Amidst a turbulent 365-day period during which the Argentine fiat currency - the Peso (ARS) - has lost over half of its value against the US dollar, the country has announced the enforcement of new capital control measures, limiting citizens' and businesses' freedom to buy foreign currency.

"The problem with restrictive, emergency measures is that they are easier to apply than to retract", said Buenos Aires-based financial analyst Christian Buteler in a tweet.

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Fernandez is now the front-runner for Argentina's upcoming presidential election in October.

"(Foreign) trade is not restricted.

"If we do not do it, the consequences would be serious".

The peso closed at 59.52 per dollar on Friday. Moreover, companies will not be able to accumulate U.S. dollars.

The measure is a step further by the central bank after it announced on Friday that banks would need to seek prior authorization before distributing their earnings, in order to "avoid any lack of money" and safeguard the liquidity of the country's financial system.

In a bid to calm market turbulence, Argentina last week asked the International Monetary Fund to restructure its debt payments on a US$56 billion bail-out loan agreed a year ago.

President Energy said it did not expect the introduction of currency controls in Argentina to have any adverse material effect on its business.

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