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The BCRA eased some exchange restrictions on a day of low activity due to the holiday on Wall Street

The headquarters of the Central Bank, in downtown Buenos Aires
The headquarters of the Central Bank, in downtown Buenos Aires

This Thursday was characterized by low exchange and stock exchange activity, a common dynamic on Wall Street holidays, as trade operations and transfers abroad are restricted.

Therefore, they highlighted two initiatives of the Central Bank to make the “stocks” more flexible exchange, a healthy sign if it is framed within the dialogue that Argentine officials are having with the staff of the Monetary Fund International, due to the renegotiation of the maturity calendar with the agency, which has always been opposed to exchange regulations.

At their regular Thursday meeting, the board of directors of the Central Bank resolved to make recent regulations more flexible on the composition of the global net foreign currency position of financial entities, which basically represented a limitation to increase their holdings in dollars.

It also issued a statement on a resolution that facilitates access to the exchange market for imports of capital goods.

Measures to reduce exchange rate regulations are a healthy sign in the framework of negotiations with the IMF

Regarding the first point referring to bank holdings, he indicated that “thanks to this modification, the Financial System will be able to return to a neutral exchange position of cash in foreign currency,” said the monetary authority through a statement.

The measure, which will take effect as of December, means taking the situation back to November 4, three weeks ago, when the BCRA had ruled that financial entities could not increase their global position in foreign currency until the end of the current month. , as a measure aimed at putting a brake on the demand for dollars in the wholesale market, in a period of the year with lower export sales.

The global net position in foreign currency is calculated by monthly average of daily balances converted to pesos at the reference exchange rate of the end of the month prior to the calculation of this relationship. The provision that will expire at the end of the month imposed that it will not be able to exceed 30% of the Computable Patrimonial Responsibility (RPC) of the banks of the month prior to the corresponding one.

More dollars for importers

Likewise, the Central decided make the conditions of automatic access to the foreign exchange market more flexible – in force since October – for the capital goods imports of up to USD 1 million, with advance payments of up to 270 days. “This will especially facilitate access of various SMEs to capital goods that will allow to increase their production and efficiency ”, remarked the BCRA.

Although in November the BCRA maintained a negative net balance of about USD 635 million due to its exchange intervention, the rhythm of exports is growing gradually towards the end of the year at wheat sales, which is harvested in summer. In this way, with greater fluidity in the genuine supply of foreign exchange, the monetary authority managed to buy foreign currency on Tuesday (USD 20 million) and Wednesday (USD 130 million), a trend that allows a more flexible capital control.

The demand for dollars by importers grows as the economy reactivates: in 2021 the GDP would grow by 10%

In this sense, agricultural analysts estimate revenues between USD 3,800 and USD 4,000 million until January by wheat exports, at a time when the cereal is trading at USD 308 per ton on the Chicago Market, its highest price in nine years, since December 2012.

Although the exchange rate situation could look less pressing in the event of an agreement with the IMF, it is far from relaxing, since the demand for foreign exchange for imports increases as economic activity reactivates fully, with an expected GDP growth of 10% in 2021, in addition to the foreseeable outflow of dollars by outbound tourism due to the opening of borders.

The Economist Joaquin Marque, director of UG Valores, considered that “the agreement with the IMF will not have definitions before the month of March. The market wonders how the Government will close the 100% exchange rate gap, which has become unsustainable ”. And he added that “historically the accelerations of devaluations of the official dollar come between the holidays and the summer vacations. The rise in the official dollar must anticipate the harvest to accelerate the sale of cereals and the liquidation of exports ”.

The Central Bank had already given signs of loosening of controls exchange rates after the elections. From Monday, November 15 stopped intervening with bond purchase and sale operations in the PPT (Price-Time Priority) segment of ByMA (Argentine Stock Exchanges and Markets) to contain the rise in dollar prices traded through stock exchange assets. Thus, the dollar MEP and the “cash with settlement” rose in two weeks from $ 184 to $ 204 and $ 215, respectively.

“After the general elections, the BCRA did not participate as actively in the bond market to curb financial dollars, and the market asked if it was due to lack of firepower or as part of start of talks with the IMF”, Evaluated Joaquín Marque.

KEEP READING:

Markets: despite the Wall Street holiday, Argentine country risk continues to break records
Dollar today: with a minimal rise, the free price was once again offered at 201 pesos
The four reasons for record country risk: why bonds fall and what rate the country must pay for its debt

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HELEN HERNANDEZ

Helen Hernandez is our best writer. Helen writes about social news and celebrity gossip. She loves watching movies since childhood. Email: Helen@oicanadian.com Phone : +1 281-333-2229

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