The US dollar has rocketed up over 40 per cent against the Argentine peso today, after the South American country revealed yesterday that it would be lifting currency controls.
The peso was trading at 13.9 per dollar shortly after the market opened, compared to the official rate of 9.8 per dollar it was trading at yesterday, before the currency was allowed to float.
The changes to the foreign exchange rules were announced yesterday, just one week after new president Mauricio Macri took office.
The new exchange rate for the peso is much closer to the blue-chip swap rate of 14.2 per dollar.
Nicholas Watson, senior vice president of Tenco Intelligence, points out that there is speculation that the Central Bank of Argentina will intervene if the exchange rate weakens below the 15 per dollar mark.
Watson also highlighted that the country's inflation rate, which was already 25 per cent in the year up to October, would impact the success of the policy change.
According to Reuters, finance minister Alfonso Prat-Gay said of the decision to remove the controls: "He who wants to import will be able to do so, and he who wants to buy dollars will be able to buy them."
However, Prat-Gay could not give a definitive answer to what the exchange rate would be after the restrictions were relaxed, remarking when asked that there was "no magic number".