The Central Bank of Argentina faces fraud charges over allegedly trying to undersell dollars at a rate much lower than those offered by global economic markets.
“This operation is resulting in serious national damage for the bank (BCRA for its synonym in Spanish), as the entity is selling dollars at around 10,65 pesos, when they could be sold at an approximate value of 14,65 dollars, the price offered on the New York exchange market for future sales,” legislators commented, the BBC reports.
The claims are bad timing for politicians in the Argentine capital, in particular for staunch Kirchner supporters, over claims that the president was aware of the bank’s activities. The allegations could also damage electoral candidate Mauricio Macri’s chances of taking over from Kirchner later this year.
Macri had said that if elected, he would rehaul restrictions on Argentines’ ability to trade pesos for U.S. dollars. However, critics have warned against doing too much, too fast. Lifting currency controls overnight could provoke a bank run and unleash what has been termed a financial “bloodbath,” according to former Central Bank President Aldo Pignanelli.
“If in reality dollar contracts were illegally sold then the economy would be affected, this would result in fraud committed against a public entity,” judge Claudio Bonadio, involved in the case, commented.
Functionaries involved in the case could also face up to six years in prison if found guilty of trying to undersell the currency.
Argentina has a long history of sickly stock markets, weak currencies and U.S. based debt claims. The country recently claimed a small victory over an ongoing case held in a U.S. court, charged with refusing to pay bondholders.The dispute over Argentina’s debt emerged after the South American nation defaulted on $100 billion of debt in 2001.