Argentina launched fourth edition of “soy dollar” program to promote foreign exchange
Buenos Aires, Sept 5 (EFE).- The Argentine government on Tuesday reinstated the so-called “soy dollar,” which allows agro-industrial exporters to obtain a preferential exchange rate to encourage exports in a context of foreign reserves shortage.
Through a decree published in the Official Gazette, the executive branch has reinstated for the fourth time the “Export Growth Program”, which was launched in September 2022. The program allows exporters to receive 75% of foreign currency at the official wholesale exchange rate of 350 pesos per dollar, with the remaining 25% being “freely available”.
This results in an exchange rate of about 450 pesos to the dollar, or about 100 pesos above the official rate, because the 25% of free availability is traded at the financial exchange rate, currently about 770 pesos to the dollar.
The government argues that the program is required because “it is necessary to continue implementing policies that strengthen the reserves of the Central Bank of Argentina.” It will be in effect until September 30 and the adhesion is voluntary.
In its first edition, in September 2022, the “soy dollar” allowed the liquidation of more than US$ 7,765 million, in the second edition, in December 2022, US$ 3,155 million, and in the third edition, between April and May last year, US$ 5,110 million.
The reason for allowing an exchange rate higher than the official one is that Argentina imposes severe restrictions on the foreign exchange market, resulting in the proliferation of alternative exchange rates up to twice the value of the official rate supported by the central bank.
This exchange rate gap encourages under-invoicing of exports and over-invoicing of imports, and also prevents the country from accumulating reserves, which are currently at a negative net level.
The Confederation of Rural Associations of Buenos Aires and La Pampa recommended to its member producers to “trade the minimum necessary to meet the obligations assumed”, and described the measures as “interventionist”, saying that they “distort the market and generate instability” with “a tax collection purpose that ignores the consequences”.EFE
vd/ics
