Argentine Central Bank creates a “soy dollar”, for faster crop liquidation

The Central Bank of Argentina has announced this Tuesday a special exchange regime so that the field accelerates the sale of the harvest. The measure means that exporters will be able to obtain about 160 pesos for every dollar sold, considerably less than the 323 that they would obtain today on the black market but higher than the 137 of the official price, set by the State.

It is not a special exchange rate, but a mechanism that, according to the Central Bank, will allow producers to maintain the value of their investment and will encourage them to liquidate the grains that, the Government denounces, are being held waiting for a devaluation of the national currency.

The new regime allows producers to deposit 70% of the pesos they receive for their dollars with a hedge against a possible depreciation of the currency. The remaining 30% can be used to buy back dollars at the “solidarity” price, that is, the official price plus a tax that raises the value to 239 pesos, according to Tuesday’s close.

The compensation gives a figure close to 160 pesos. The president of the Central Bank, Miguel Pesce, said after the announcement that he hoped to “unlock the difficulty expressed by the agricultural segment regarding soybean production, which had been delayed compared to previous years.” The regime will be in force until August 31.

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The Government had been denying for weeks that it was studying a special exchange rate regime for the countryside, like the one it announced on Tuesday. Last Friday, the president, Alberto Fernández, accused producers of “saving US$20 billion” in grains while waiting for “better profitability.”

This Tuesday, during an act to commemorate the 70th anniversary of the death of Eva Perón, he returned to the charge in the same terms “Some continue to speculate with a devaluation to sell what they have to sell and bring in the dollars that allow the Argentina will continue to grow”.

The president of the Central Bank, Miguel Pesce, was more cautious in the figures and estimated that the dollars retained by agricultural producers are about US$2.8 billion, to which another US$2.2 billion from the industry are added.

“That is the universe. Now we’ll see how many will adhere. We do not see what could be the inconvenience for them to join, since now they have the instrument that allows them to preserve the value of their asset,” he said. Soybean dollars will be vital during August, the month in which gas import bills skyrocket due to the winter cold.

The first to react to the announcement was Nicolás Pino, president of the Rural Society, the entity that brings together large producers. “It is a measure without consensus and that is not good in any sector of the economy. It gives us the impression that it is another type of change that seems very difficult to implement,” he said.

Days before, Pino had denied that they are withholding the harvest, as the Government accuses. “What is usually sold for this time of year is being marketed. As of July 13, 64% of the campaign was sold,” he assured.

BATAKIS SEEKS SUPPORT IN WASHINGTON

The Government is in need of foreign currency to sustain the value of the peso, which has lost more than 40% of its value in the informal market since July 1, when Martín Guzmán, the Economy Minister, who in January signed a refinancing agreement with the International Monetary Fund, resigned.

His replacement, Silvina Batakis, traveled to Washington on Monday to meet with the head of the Fund, Cristalina Georgieva, and representatives of the main investment groups.

It has been a presentation tour, in which Batakis heard first-hand the distrust of the market in her promise of fiscal adjustment and respect for the agreement with the Fund that she launched as soon as she took office.

The doubt is in the support that she may have from the vice president, Cristina Kirchner, responsible for Guzmán’s departure and critic of the text signed with the IMF in January. Kirchnerist deputies in Congress voted at the time against the agreement.

“Today we are in a government coalition and within that coalition there is a balance that is effectively given so that we can implement these measures,” Batakis said during a press conference at the Argentine embassy in Washington, before returning to Buenos Aires.

“I believe that, in this sense, today there is strong support from all sectors in our political space.” Those same words she used in the morning before a score of investors on Wall Street, many of whom have debt bonds that Guzmán restructured in August 2020.

Before Georgieva there were also promises. And the president of the IMF defined the meeting as “constructive”, without giving more details. The bad news came in the latest World Economic Outlook report published this Tuesday, in which it warned about inflation, today above 60% year-on-year. “

If left unaddressed, it could further fuel social unrest and weaken political support for the program. These risks cannot be fully mitigated through program design and contingency planning,” the report says. In statements after the presentation, the Fund’s chief economist, Pierre-Olivier Gourinchas, considered the situation in Argentina “quite worrying”.