(MENAFN- The Peninsula) Jorge Lischetti applied to purchase dollars from the government the day Argentina eased controls. He stashed the $300 he was allowed to buy in January in his Buenos Aires home and did the same on the first day of February
Argentines such as Lischetti, a legal adviser, are contributing to a drop in the country's international reserves by refusing to deposit the dollars they purchase in local banks. More than 12 years after Argentina restricted withdrawals and converted dollar savings into pesos amid an economic crisis that led to a $95bn default, 91 percent of those who qualify to buy foreign currency from the government are paying a 20 percent surcharge to keep the cash
"History in Argentina is scary enough to make you want to keep your money out of the bank," Lischetti, 24, said in an interview in the capital
Argentines have applied to buy and take home $215m since President Cristina Fernandez de Kirchner opened up dollar purchases on January 27, exacerbating a plunge in reserves already at a seven-year low. Argentina's 19 percent devaluation last month and the easing of currency controls reflect Fernandez's efforts to cool black market trading, where the peso is 36 percent cheaper than the official rate
The country's bond yields and the cost to insure its debt against default are near a four-month high on speculation she won't be able to stem the haemorrhaging of dollars. Reserves fell 35 percent to $27.8bn in the 12 months to February 3, according to the central bank
The tax agency has received 463,327 requests to buy foreign currency since the government allowed the wealthiest Argentines to purchase dollars for savings at the official exchange rate for the first time in 18 months. Of that total, 423,645 have chosen to pay a 20 percent tax to take the greenbacks in cash, according to data from Afip, the tax agency
"In a context of uncertainty such as this one, Argentines who have lived through hyperinflation and numerous mega-devaluations, they want to keep their dollars," said Belen Olaiz, an analyst at Buenos Aires research company abeceb.com. In the 2001 financial crisis, Argentina froze savings accounts to stop a run on bank deposits, a measure dubbed the "corralito". Early the next year, the government forced banks to convert dollar-denominated deposits into pesos, which slashed savings to a fourth of their value
Argentines have an estimated $160bn of undeclared funds held abroad or stashed at home, according to the government. The Federal Reserve estimated in a 2006 report that Argentina, which the CIA says is the world's 33rd-most populous nation, had at least $50bn in US cash - about one of every $9 then circulating abroad
While some Argentines hide their dollars to evade government scrutiny, others are contributing to the erosion of the country's reserves by spending abroad
Juan Pablo Las Heras, 32, a manager at an agriculture company, said he was buying $300 at a local branch of Madrid- based Banco Santander SA in downtown Buenos Aires to spend on a holiday abroad. He said he planned to deposit the money in his dollar account and withdraw it once on vacation
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