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Black Market for Dollars Grows in Argentina

People in Argentina that fear their savings will be devalued have long exchanged their pesos for dollars. However, new currency controls are now forcing these citizens to turn to the black market, the Associated Press reports. The spread between the official exchange rate and the free-market is widening.

Currency controls are slowing the flight of capital out of the country, which is the stated objective, but the controls fan already intense inflation worries and mistrust of the government. This further discourages local investment, which is what is really needed. As the black market becomes more desirable, the government expends more effort to shut it down.
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