Argentina: agricultural exchange rate debuts without annotations

The debut of the new dollar for agricultural exporters did not register cash entries on Monday despite the implicit devaluation that it represents for the peso, when the Government seeks by all means to increase the scarce net reserves of the central bank (BCRA).

The official desperation to get hold of foreign currency led to the relaunch of a special exchange rate intended basically for soybean producers, who have until the end of May to sell positions at 300 pesos per dollar. A similar measure was implemented last September and November, after the assumption of Sergio Massa in August at the head of the Ministry of Economy.

“On the first day of validity of the renewed stimulus plan for the export sector there were no operations registered with the new regime”said Gustavo Quintana, operator of PR Corredores de Cambio.

One economist argued that “It was surprising among the operators that it did not start, there is still uncertainty about some details but it should start immediately since it is no longer possible to support the currency drain that has been accumulating.”

In the bleeding of reserves, the BCRA had to sell some 100 million dollars, after losing another almost 418 million last week, cut by the financial holidays of Thursday and Friday.

A growing inflation that would reach the 110% this year, according to the last “Survey of Market Expectations” (REM) carried out by the BCRA, puts more doubts on investments in a complicated electoral year. “We are in an extremely vulnerable economy. It is not a novelty, but it is a process that has been sharpening for a long time. What Sergio Massa is trying to do is buy time and prevent the bomb from exploding.”said the economist Rodrigo Álvarez, and estimated that “In the medium and long term, what we see is that instability is going to grow at a phenomenal rate.”

Source: Reuters