Argentina imposes currency controls to support economy

RIO DE JANEIRO - Argentina has imposed currency controls in an attempt to stabilise markets as the country faces a deepening financial crisis.

The government will restrict foreign currency purchases following a sharp drop in the value of the peso.

Firms will have to seek central bank permission to sell pesos to buy foreign currency and to make transfers abroad.

Argentina is also seeking to defer debt payments to the International Monetary Fund (IMF) to deal with the crisis.

In an official bulletin issued on Sunday, the government said that it was necessary to adopt "a series of extraordinary measures to ensure the normal functioning of the economy, to sustain the level of activity and employment and protect the consumers."

The central bank said the measures were intended to "maintain currency stability."

It also said that while individuals can continue to buy US dollars, they will need to seek permission to buy more than $10, 000 a month.

The measures will apply until the end of this year.

Argentina has been struggling with a financial crisis, which was exacerbated by the president's defeat in a recent primary poll.

The peso fell to a record low last month after the vote showed that the business-friendly government of President Mauricio Macri is likely to be ousted in elections next month.

Macri was elected in 2015 on promises to boost Argentina's economy with a raft of liberal economic reforms.

But the country is in a deep recession. It has one of the world's highest inflation rates, running at 22 percent during the first half of the year.

Argentina's economy contracted by 5.8 percent in the first quarter of 2019, after shrinking 2.5 percent last year. Three million people have fallen into poverty over the past year.