Argentine central bank curbs financial institutions access to pesos

By Hugh Bronstein and Cassandra Garrison

BUENOS AIRES (Reuters) – Argentina’s battered bonds and currency were driven still lower on Friday amid downgrades by three credit ratings agencies and a new central bank policy that some private economists said hinted at a return to capital controls.

“Financial entities must get prior authorization from the central bank to distribute their results,” the central bank said in a statement without elaborating.

Central bank spokesmen could not be reached immediately for further comment.

“The central bank is not allowing them to distribute results, that means they cannot use their pesos. This is not a restriction of access to the FX market, but on the availability of pesos,” a source familiar with the central bank plan told Reuters.

“The central bank wants banks to be very well capitalized right now,” added the source, who requested anonymity because he was not authorized to speak to the media.

The latest round of tumult to plague Latin America’s No. 3 economy started with the Aug. 11 primary election, in which business-friendly President Mauricio Macri got soundly thumped by center-left Peronist challenger Alberto Fernandez.

The general election, with Fernandez now the clear front-runner, is in late October.

(Hugh Bronstein, Cassandra Garrison, Walter Bianchi, Gabriel Burin and Hernan Nessi in Buenos Aires; Rodrigo Campos in New York; Editing by David Gregorio and Tom Brown)