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Argentina’s foreign reserves plunge to recent low

January 17, 2014

BUENOS AIRES, Argentina (AP) — Argentina’s foreign reserves have plunged to their lowest level in more than seven years.

The government dismissed criticism over the drop Thursday as officials announced that the Central Bank’s reserves had reached $29.85 billion. That’s the lowest level since November 2006.

Cabinet chief Jorge Capitanich said the dwindling reserves were caused by “greater expenses in goods for productive development,” and efforts to pay huge debts, including $10 billion to the International Monetary Fund in late 2005.

Argentina can’t attract international loans at market rates after its 2001-2002 economic collapse. Instead, it uses the reserves to buy fuel overseas, meet foreign debt payments and finance economic stimulus programs.

Analysts say the reserves have also been depleted by government currency controls meant to stem capital flight.

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