Argentina tears down currency controls in major policy shift as it seals IMF deal

Argentina dismantled key parts of its years-long currency controls and loosened its grip on the peso on Friday as it sealed a US$20 billion, 48-month Extended Fund Facility deal with the International Monetary Fund (IMF).

The IMF deal lays out an immediate disbursement of US$12 billion, and a first review is planned for June with an associated additional disbursement of some US$2 billion, the Washington-based lender has said.

The South American nation’s central bank announced that it would undo a fixed currency peg from Monday, letting the peso freely fluctuate within a moving band between 1,000 pesos and 1,400 pesos per dollar, versus 1,074 at the close on Friday.

Argentina would eliminate major parts of the so-called cepo capital controls that had restricted access to foreign currency, the central bank said in a statement.

Companies from this year will also be able to repatriate profits out of the country, a key demand from businesses that could unlock more investment.

“As of Monday, we will be able to put an end to the foreign exchange restrictions which were imposed in 2019 and which limit the normal functioning of the economy,” Economy Ministry Luis Caputo said at a press conference on Friday evening.