Argentines have withdrawn just over US$1 billion in dollar deposits from the country’s banking system in the past seven weeks as the government struggles to convince them that the peso will stabilize.
After the resignation of former Economy Minister Martín Guzmán on July 2, savers began withdrawing their dollars from bank accounts at a rapid pace, further plunging the government into crisis.
(Scuffles in Buenos Aires as police disperse protesters and supporters outside Argentinian VP’s home)
Argentina’s third economy minister since then, Sergio Massa, experienced a brief market recovery after taking office before deposits fell again.
Although some dollar deposits are part of Argentina’s hard currency reserves, which are also declining, they are not considered part of the central bank’s net reserves because they cannot normally be used to support the currency.
Total deposits fell to US$14.55 billion on Aug. 16, central bank data show, less than half of the peak of about US$32 billion in 2019, before the primaries resulted in an election victory for President Alberto Fernandez.
Between that vote and Fernández taking office, Argentines withdrew several billion dollars in deposits.
Deposits are a near real-time thermometer of Argentines’ economic expectations. In late 2001, during one of the country’s worst crises, the government banned the withdrawal of large amounts from ATMs, contributing to social chaos.