It isn't hard to see why Argentina tightened its capital controls today. The pace of outflows over the last 2ms -- and the drain on (net) reserves -- was unsustainable.
reuters.com/article/us-arg…
reuters.com/article/us-arg…
The chart above (and here) uses Argentina capital control data from the BCRA (via HAVER) -- the nearly $40b in "reserves" used over the last 12ms counts funds borrowed from the IMF.
2/x
2/x
The categories in this data set don't perfectly match to the BoP. But there is little doubt that capital flight by residents has been a large contributor to the $18b plus draw on reserves in August and September.
3/x
3/x
This has been an important difference between Argentina and Turkey.
Turks have shifted from domestic lira deposits to domestic dollar deposits at times, but generally have kept their funds in Turkey ...
4/x
Turks have shifted from domestic lira deposits to domestic dollar deposits at times, but generally have kept their funds in Turkey ...
4/x
In any case, Argentina's current account has swung into a modest surplus -- but not one large enough to cover the current pace of capital flight. And there are limits to how many borrowed reserves Argentina can use.
5/5
5/5
