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The Central Bank backtracked on a kind of "exchange rate insurance" for companies that was generating another ball of debt

2023-11-28T18:37:54.437Z

Highlights: The Central Bank backtracked on a kind of "exchange rate insurance" for companies that was generating another ball of debt. The financial institution allowed exporters to buy special bills pegged to the official dollar. In this way, they hedged against a possible devaluation. But on Monday, through Communication "A" 7897, the Central Bank reversed course and restricted the number of companies that can take advantage of that "insurance" Now only banks that have dollar-linked deposits, oil companies that have increased their production and importing SMEs will be able to take advantage.


The financial institution allowed exporters to buy special bills pegged to the official dollar. In this way, they hedged against a possible devaluation.


The drop in financial dollars these days will be more expensive than thought. It was all the more expensive that Miguel Angel Pesce, who is still at the head of the Central Bank, had to backtrack on the rule that had enabled the "contraption" by which the escalation of that exchange rate had been stopped.

It so happens that Pesce had managed to take the pressure off free dollars by giving exporters, mainly oil companies, a kind of "exchange insurance" based on a rule last Wednesday ("A" 7892) that allowed oil companies, SMEs and consumer companies, among others, to access LEDIV (Internal Bills of the Central Bank of the Argentine Republic in dollars liquidable in pesos at the official exchange rate).

The operation was as follows: exporters could enter 50% of payments from abroad via cash with liqui at $840, and the other half at the official dollar, but they could buy LEDIV at the price of the official dollar ($360), a kind of bond tied to the official dollar.

This meant that in the event of a devaluation, companies could ensure that they were covered, without the cost of hedging with a future dollar.

Traders quickly spotted this spectacular business for companies that saw LEDIVs go from a volume of $2.800 billion on Nov. 7 to more than $5 billion.

But on Monday, through Communication "A" 7897, the Central Bank reversed course and restricted the number of companies that can take advantage of that "insurance." Now only banks that have dollar-linked deposits, oil companies that have increased their production and importing SMEs will be able to take advantage of these Bills.

They liquidate 50% of the expo at 840, and then subscribe to the day's A3500, knowing that they are going to a short exchange rate convergence. 30/60/90 days.

NE

Source: clarin

All business articles on 2023-11-28

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