Argentina’s Central Bank asked crop exporters to sell more dollars than they were planning this month so that the country’s reserve level will rise to meet an upcoming target for its US$44-billion programme with the International Monetary Fund.
Authorities at the institution asked companies that are part of the crushing and export chamber Ciara-Cec to sell more dollars in the exchange market than the original US$2.5 billion they had planned to sell in June, according to two people with direct knowledge of the matter. The Central Bank asked them to sell an additional US$500 million, said one of the people, who asked not to be named discussing private conversations.
If met, the request would help the Central Bank prop up its foreign reserves and get closer to a goal of accumulating US$3.5 billion in net reserves by the end of June. Increasing the amount of foreign reserves is one of the quantitative goals the country needs to meet to receive new disbursements from the IMF.
A central bank spokesman declined to comment. A representative for Ciara-Cec, the chamber that groups 48 percent of the country’s exports, did not immediately reply to a request for comment.
The request was made in a friendly disposition rather than a coercive manner, the people said. The Central Bank also asked exporters to deposit the dollars received from their crop sales into their local bank accounts, which would be reflected in an increase to the country’s reserves.
To sweeten the proposition, the Central Bank also changed a regulation earlier this week that previously forced exporters to convert their dollars to pesos within five days of making sales and instead expanded that time frame to 15 days. That allows companies more time to arbitrage prices.
The government has a history of interventionism in the agriculture sector, as its crop sales are a key driver of the foreign exchange market.
The Central Bank bought US$983 million in the last three trading days, the highest amount in the last eight years, according to data by PR Corredores de Cambio. Grain exporters were estimated to have sold US$3.5 billion so far this month, the broker added.
by Ignacio Olivera Doll, Bloomberg
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