Argentina's central bank cuts dollar purchase limits to stabilize the economy after Sunday's election result
- On Sunday, Argentina ousted incumbent president Mauricio Macri and voted left-wing Peronist Alberto Fernandez into power.
- Monday, the central bank slashed dollar purchase amounts to stabilize the economy and protect the Argentine peso amid increased economic uncertainty in the country.
- Fernandez has not be forthcoming about his economic plan, and investors are increasingly worried about another default.
- Investors will also be watching former president and now vice president-elect Cristina Fernandez de Kirchner. Her presidency was gripped by scandal and she's been indicted in 11 corruption cases.
- Read more on Business Insider.
Argentina on Sunday elected Alberto Fernandez its next president, choosing left-wing populism over incumbent Mauricio Macri's austerity plan for the nation, Bloomberg reported.
On Monday, the Central Bank of the Republic of Argentina moved to limit the amount of dollars that can be purchased to stanch large outflows of foreign reserves from the country and keep the peso steady, according to Al Jazeera.
Dollar purchases are now restricted to $200 per month via bank accounts and $100 per month in cash until December. It's a huge cut from the $10,000 limit and currency controls imposed in September to protect the economy following the August primary election, where a surprise sweep by Fernandez sent Argentina's stocks, bonds, and currency sliding.
The central bank's tighter limits come amid uncertainty about Argentina's economic future. Fernandez has been handed a damaged economy with an unemployment rate above 10% and inflation above 50%. After the August primary, foreign reserves shed $20 billion, and now stand at roughly $43 billion, Al Jazeera reported.
When Fernandez and his running mate, former president Cristina Fernandez de Kirchner, take office December 10, they will have to carefully balance satisfying the increased social spending voters want with the demands of the International Monetary Fund. Last year, the IMF agreed to a record $56 billion bailout with then-president Macri, who had cut spending to get the country back on track.
But Fernandez has not been forthcoming with his economic plan, and has yet to name cabinet members, increasing investor worry that Argentina will default again on its sovereign debt. After Macri's work to open the country's market to investors abroad, another default could end foreign investment in Argentina, executive director and head of client investment strategy for Latin America at JPMorgan Private Bank Franco Uccelli told Markets Insider in August.
In addition, many are watching to see how much influence vice president Kirchner will have as her own presidency was marked by scandal.
During her time in office, her administration fixed statistics, limited foreign capital, and relied on subsidies and social programs that proved to be unsustainable, according to The New York Times. She's also been indicted in 11 corruption cases, although she denies wrongdoing in any of them.