Redacción Red Latina
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Replenishing the central bank’s coffers is a key step for President Javier Milei to lift long-standing capital controls and move toward normalizing Argentina’s economy. The central bank has few foreign exchange reserves, leaving it with little ammunition to defend the country’s currency if necessary. In Argentina, dollars are hard to come by toward the end of the year, but the central bank just hit its highest level of dollar purchases in 15 years in October. This is partly due to a tax amnesty program and partly due to crop exporters, even though the harvest season ended months ago.
That has helped agricultural sector dollar transactions top $120 million a day in recent weeks, according to brokerage PR Cambios, which compiles data from Argentine grain exporters association Ciara. Interest rates on dollar loans, which range from 2.5% to 5%, have come down, while peso investments still earn interest of between 43% and 51%. Assuming Santiago Bausili, the country’s central bank president, maintains the crawling peg exchange rate that devalues the peso against the dollar at a rate of 2% a month, peso yields are expected to remain high.
Argentine banks have had more dollars at their disposal because of the tax amnesty that ends on Friday, translating to about $12 billion in deposits over the past three months, according to official data. That has boosted their lending capacity. Dollar purchases on the official market are helping the central bank increase its foreign exchange reserves, which so far in October total more than $1.2 billion. Still, the central bank is still in urgent need of reserves after liabilities hit a low of nearly $8 billion in September, according to the local brokerage’s consumer price index. Banks have extended about $1.3 billion in dollar-denominated loans to crop exporters, up 25% from July, according to estimates by Banco Supervielle SA, one of Argentina’s largest banks.
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