In search of USD 5,000 million for reserves, the Central Bank defined how it will encourage exporters

The Central Bank formalized the instrument that will allow exporters to advance USD 5,000 million in the next 60 days to strengthen reserves, in line with the announcement made the day before yesterday by Sergio Massa, new Minister of Economy. It is a 180-day letter that the BCRA will issue in favor of the banks and will pay a higher interest rate than the market rate. The entities will then turn around and automatically offer them to exporters.

Thus, companies will have an additional incentive in the framework of export pre-financing. The idea is that these currencies can enter the local market, but without the obligation to settle them within a maximum period of 15 days. “Now the companies will be able to wait up to six months to transform those dollars into pesos, at the exchange rate of the day they choose to do so,” said sources from the monetary entity.

Both from Economy and from the BCRA rule out exchange incentives to attract dollars from exporters. “With any sector that you talk about, they want to enter the foreign exchange into the dollar Stock Exchange and that is impossible”, they explain.

Massa had assured in his assumption at the head of the Economy portfolio that he has a commitment from the grain companies for early liquidation for USD 5,000 million for the next 60 days, along with other sectors such as mining and fishing companies. The objective is to strengthen reserves and bring more calm to the foreign exchange market. In addition, they will seek to add another USD 2,000 million from multilateral organizations such as the IDB and the Andean Development Corporation.

Exporters who enter foreign currency into the local market, therefore, will have the facility to stay in dollars for a much longer period than the current one. And they will also receive a higher interest rate than what banks offer today. It will arise from a tender that will be carried out by the BCRA itself. It is estimated that the yield will also be higher than what the cereal or mining company itself obtains for leaving the dollars abroad, prior to the liquidation of the foreign currency in the local market. The circuit closes with the exchange of dollars to pesos, which are used to pay agricultural producers for their production.

Exporters who enter foreign currency in advance will have a “carrot”, through a bill in foreign currency that will pay an interest rate higher than the market rate. They can wait up to six months to settle the dollars

On the other hand, The BCRA board of directors also enabled access to dollar-linked sight accounts for exporters who anticipate settlement by more than thirty days with respect to the term determined for each sector. This is a measure that was announced at the time by the former Minister of Economy, Silvina Batakisbut that now had not been implemented. In this way, the companies are covered from a devaluation jump, since they will be able to invest their pesos in an instrument that adjusts according to the evolution of the official dollar.

The reserve situation reached a dramatic point, as the BCRA continues with strong daily sales. In the first four days of August alone, it had to intervene with USD 840 million, while in July it had lost just over USD 1.2 billion.

With such a picture it is estimated that net reserves do not exceed USD 2,000 million, when the commitment with the IMF is to reach USD 6,500 million by the end of the year. Liquid reserves would already be in negative territorytherefore, the dollars from the reserves of deposits in foreign currency would be used to supply the market demand.

Massa’s strategy in his early days is to attack this issue as the most pressing, given the possibility of a new overflow of financial dollars. As he stated on Wednesday, the intention is from this improvement in the level of reserves to achieve a gradual narrowing of the rate of the exchange rate gap.

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