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(FILES) In this file photo taken on August 30, 2019, facade of Argentina's Central Bank in Buenos Aires. - The government of President Mauricio Macri on Sunday imposed foreign-exchange controls on Argentine exporters at the end of a week of financial uncertainty that saw a sharp drop in the value of the peso. Exporters were ordered to seek permission from the Central Bank of Argentina before purchasing foreign currency, according to a decree published in the Official Bulletin. (Photo by RONALDO SCHEMIDT / AFP)RONALDO SCHEMIDT/AFP/Getty Images

RONALDO SCHEMIDT/AFP/Getty Images

The Argentine government authorized the central bank on Sunday to restrict purchases of U.S. dollars as it burns through its reserves in an effort to prop up the peso currency.

The measure, which is scheduled to be in place through the end of the year, means major exporters will need permission from the central bank to access the foreign-exchange market to purchase foreign currency and make transfers abroad.

“Given various factors that impacted the evolution of the Argentine economy and the uncertainty in the financial markets, the executive branch needed to adopt a series of extraordinary measures aimed at ensuring the normal functioning of the economy, sustaining the level of activity and employment and protecting consumers,” said the decree published in an official bulletin on Sunday.

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The central bank said in a statement the measure does not limit anyone from withdrawing U.S. dollars from their accounts. It does, however, restrict people from buying more than US$10,000 a month, or making transfers exceeding that amount each month.

It also requires companies to sell their U.S. dollars from exports in the local market. They will not be permitted to stockpile U.S. dollars, the bank said.

The measure is a step further by the central bank after it announced on Friday that banks would need to seek prior authorization before distributing their earnings, in order to “avoid any lack of money” and safeguard the liquidity of the country’s financial system.

Some private economists said the policy announced last Friday, which could limit the availability of hard peso currency to financial institutions, looked like a return to capital controls in Latin America’s third-largest economy.

Argentina’s government and central bank are desperately trying to stabilize the economy after the results of the Aug. 11 primary election sent bonds, stocks and the peso into a tailspin. Last week, risk spreads blew out to levels not seen since 2005 while the local currency extended its year-to-date swoon to 36 per cent.

Centre-left Peronist challenger Alberto Fernandez garnered a wider-than-expected lead over business-friendly incumbent Mauricio Macri, causing market fears over a potential return to the interventionist policies of former president Cristina Fernandez de Kirchner, Mr. Fernandez’s vice-presidential candidate.

Mr. Fernandez is now the front-runner for Argentina’s coming presidential election in October.

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The central bank has burned through nearly US$1-billion in reserves since last Wednesday in an effort to prop up the rickety peso.

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