As currency controls to restrict the purchase of US dollars took effect in Argentina on Monday, the country's stocks ended up closing 6.45% higher.

The plunging Argentine peso also closed 0.88% stronger than the dollar on official markets, but closed 0.79% weaker in the black market, Reuters news agency reported, with the difference underscoring the loss in trust in the currency's official price.

In a sharp policy turnaround, the center-right government of President Mauricio Macri announced currency controls on Sunday in an effort to stabilize the country's deepening financial crisis.

The "extraordinary measures" include limiting individuals from purchasing more than $10,000 (€9,100) per month, as well as requiring government permission to transfer money abroad.

The full effects of the currency controls will be more evident on Tuesday when the US market reopens following the Labor Day holiday.

Long lines to withdraw cash

Despite government assurances that Argentina's financial system is solid, many waited in long lines on Monday to withdraw pesos or dollars from their accounts.

"All these people are taking out what they have, or part of what they have, because they'd rather keep their cash at home at this stage," 61-year-old Julio Novoa told Reuters.

Many were worried about being blocked from withdrawing their money as was the case during Argentina's economic crisis in 2001.

Macri's government issued a statement, saying there would be no limit to withdrawals and encouraged banks to extend their opening hours.

Argentina has been in recession since 2018 and is battling rising unemployment and high inflation, which is currently at 55%.

Markets were rattled and the peso fell sharply following last month's primary election which saw leftist Alberto Fernandez emerge as the favorite ahead of Macri. The general election is due to take place on October 27.

rs/cmk (AFP, Reuters)

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