Global turmoil spurs Argentines to bring money home
[ ]<LI class=publication>Reuters
[ ], Thursday October 9 2008
http://www.guardian.co.uk/business/feedarticle/7847376
By Kevin Gray
BUENOS AIRES, Oct 9 (Reuters) - U.S. and European bank accounts have long been a safe haven for Argentines weary of economic upheaval but the global financial crisis has pushed some to do the once unthinkable: bring their money home.
Financial analysts, stock market brokers and workers at foreign exchange houses say Argentines are so worried about the deepening trouble abroad they are repatriating their cash, stashing it under the mattress or in safety deposit boxes or pouring it into real estate.
"It's crazy, who would have ever thought our money would be safer here than in the United States or Europe!" said one man who for years kept his savings in U.S. bank accounts and mutual funds but has this year moved about half of the cash back to Argentina.
Repeated bouts of turmoil over the last half century battered faith in Argentina's financial system, and deadly riots broke out almost seven years ago when the government froze bank accounts and sharply devalued the currency, unleashing one of worst economic crises on record.
Argentines hold more than $100 billion in foreign bank accounts, private analysts estimate, but some of it is being returned now.
"The global crisis has turned everything on its head," said Guillermo Curutchet, an analyst at Sudamericana de Finanzas.
TUMBLING MARKETS
To many here, the recent scenes of tumbling stock markets and bank collapses are all too familiar.
"We have learned through very bitter experiences about funny things happening at banks, so people react quickly," said one stock market broker who asked not to be named.
Argentines often turn to the black market to evade taxes when they bring home money that is invested or deposited abroad, making it difficult to quantify how much has come back.
Still, analysts say the price charged by some exchange houses to receive money from abroad using wire transfers has more than doubled in recent weeks, suggesting strong demand.
In a further sign the amount flowing back may be significant, the government is reportedly considering tax breaks to those who invest their repatriated cash in local business projects, according to media reports.
Argentina's economy, the second largest in South America, has grown by more than 8 percent in each of the last five years as it rebounded from the 2001-2002 crisis.
The boom has been largely built on a surge in agricultural exports, although falling global commodities prices now threaten to slow growth. Rising inflation has also raised concerns about the economy's health.
The man with his money stashed abroad said the global crisis has dominated conversations with his family and friends in recent days.
He and other family members with offshore accounts first began to bring their money back home when global markets started to roil earlier this year.
He said most of them decided to leave at least half of their money in U.S. banks, thinking the crisis would eventually subside.
"I figured things couldn't get any worse, but I was wrong," he said. "But nobody knows what to do with it or where to put it." (Additional reporting by Helen Popper; Editing by Kieran Murray)
