Forex Trading in Argentina – Is it Possible?
Investors looking to enter the world of Forex trading can do so wherever they may live in the world. Online Forex trading has made this possible, but there are still a number of countries in which Forex trading is illegal. Here at topratedforexbrokers.com, our aim is to be as honest and upfront about the facts as possible. So it’s only fair to inform you that Forex trading in Argentina is illegal.
Argentina is a beautiful country, located in southeastern South America, bordered by Bolivia and Paraguay to the north, Brazil to the northeast, Uruguay to the east, and Chile to the west. For tourists, Argentina has plenty of glorious sites to offer, but up until recently it has had a very unstable economy, and a high rate of inflation. Up until very recently, there were strict currency controls in place, as there were a lot of problems with the value of the country’s currency, the peso.
In December 2015, a new President was inaugurated with the intention of introducing economic reforms that would help to jumpstart the country’s economy, and stabilize the value of its own currency. It is still early days to decide whether the reforms are going to work, but things are definitely very promising. If you want to understand a little more about the problems in Argentina, take a few moments and read recent business news from the BBC.
Why was foreign currency exchange so strictly regulated in Argentina
Tight exchange controls were introduced in Argentina in 2001, after ten years of economic deregulation. Towards the end of 2002, until the end of 2011, the Central Bank of Argentina gradually reduced some of the restrictions, before it made a u-turn and strengthened them again, in response to the global economic crisis and the depletion of its own foreign exchange reserves.
However, it is not just the Central Bank that can impose foreign exchange restrictions. The Argentine Tax Authority can also do it through tax regulations. The regulations they impose are very detailed and specific and are constantly being changed. For the latest information we would advise you contact the regulatory bodies of Argentina.
Foreign exchange controls were introduced to ban or restrict the amount of foreign currency or local currency allowed to be traded or purchased. It is usually done to prop up a weak economy, and allow a greater degree of economic stability.
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What the future hold for foreign exchange and Forex brokers in Argentina
Trading currencies in Argentina, is like nowhere else in the world. It is a lengthy procedure that involves spreadsheets, outdated tax codes and the need to obtain clearance from the Central Bank. Now that the current government has decided to lift some of their currency controls, it is going to have an impact on the Forex market and Forex brokers in Argentina. Almost as soon as the restrictions were lifted the Argentine peso lost almost a quarter of its value. This was the biggest decline since 2002, when the peso-dollar parity was abandoned.
It was an expected decline, according to leading economists, as the policy which limited the sale of US dollars had restricted imports, damaged economic growth and gave birth to a thriving black market in the Argentinian currency. In fact many tourists travel to Argentina just to experience the thrill of trading currency on the black market.
The new president introduced a number of other measures such a cutting personal income taxes, restaffing the country’s discredited statistics agency, and replacing the Central Bank president. But scrapping controls on currency exchange the biggest and boldest move by far. So why has he made such a decision? Letting the peso float should spark growth in the country’s economy, particularly in Argentina’s agribusiness sector. Companies will be able to export again because exchange rates are much more competitive. The exports will in turn bring valuable dollars into the country, and hopefully instil some confidence in investors.
Many Argentinians were anticipating the decline, as they had already become accustomed to the country’s long history of boom and bust. It is expected that the removal of foreign exchange restrictions will also lead to increased inflation, as imports will be more expensive when viewed in terms of the local currency. But many are saying they can weather the storm as currency controls were ruining the country and getting rid of them can only make things better in the long run.
There are still a number of hurdles to overcome before Forex brokers in Argentina are seen as the norm. The country has suffered many ups and downs throughout history, and this looks set to continue. Nevertheless, we will be keeping a close eye on developments in the country, and aim to keep you informed of any future developments.