2024-08-09 21:43:00
in difficulty Central Bank of the Republic of Argentina (BCRA) To accumulate international reserves, Soybean prices fall It creates another challenge for Javier Mire’s government and deepens uncertainty about how to obtain funding. Dollar There is also a tight debt plan until the end of the year.
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This phenomenon occurs due to improved climate in the United States and complicates Argentina’s external sector at a time when the BCRA is working to purchase foreign currencies in the Single Free Foreign Exchange Market (MULC). The company closed out selling positions in both June and July, and its purchases totaled $206 million in the first few days of August.
last month, Monetary authorities lose more than $2.6 billion in reserves Used to repay debts owed to private bondholders, the International Monetary Fund (IMF) and other multilateral organizations. Until the end of this year, the government will have to face the expiry of $5 billion This comes against a challenging backdrop with regard to foreign exchange hoarding.
Soybean prices put pressure on Caputo plan
a report economic perspectiveMiguel Kiguel’s advisory firm highlights that the average price in 2024 will be $420, while in 2023 it has risen to $510. Meanwhile, the average price over the past 20 years was $530, so The current price is 30% lower than the historical price.
“If we look at other crops, the results don’t change. Wheat prices are nearly 30% lower than the historical average, and corn prices are 35% lower than the historical average.. Logically, this is not the only factor at play, but while the agricultural sector did clear foreign currency in July, it was not enough to prevent Argentina’s foreign exchange reserves from declining. Falling international prices also complicate dollar accumulation” the report warns.
On top of this, noise in international markets caused emerging currencies to depreciate. The national economy has been particularly affected by the depreciation of the Brazilian realThe peso was at 5.51 and had not broken through the 5 mark until mid-March.
“This complicates Argentina’s real multilateral exchange rate beyond the difference between inflation and dollar depreciation. Other emerging currencies have not performed poorly against the dollar. We have had a 15% dollar appreciation in Brazil 13%.
On the other hand, a portion from GMA Capital said the decline in the value of a ton of soybeans jeopardized the sustainability of two extremely sensitive aspects of the economic program implemented in the country. Louis Caputo y santiago basili: External and Financial.
“first, Lower export caps, thereby harming reserve accumulation. Meanwhile, weak international values have removed incentives for producers to liquidate. A domino effect could impact CCL’s sales decline due to the hybrid scenario, reducing financial offers and putting pressure on shortfalls. In the second case, May have an impact on government revenuewhich is an essential and indisputable pillar for gaining market trust. This multifaceted shock simultaneously removes external and financial sustainability, two key aspects that guarantee the solvency of dollar bonds,” analysts said.
Soybeans Withheld Less: Orders Exchanged for Fresh Dollars
At the closing ceremony of the IDEA Rosario experience, the head of the Chamber of Petroleum Industry of the Republic of Argentina (CIARA) said: Gustavo Idigorashe said in passing that if the economic team cuts Soybean withholding tax reduced from 33% to 25%, “we can increase $5 billion in six months”.
According to CIARA data, between January and July 2024, Agricultural products export earned US$13.64 billion in foreign exchange. This figure is still slightly higher than the $12.957 billion in the first half of 2023, although drought has severely affected rural areas. This figure is due to lower prices this year and a higher proportion of sales contracts still to be signed.
also, The settlement amount in July was US$2.616 billiona sharp jump from May’s $1.978 billion. Although this reflected the highest monthly amount so far this year, the central bank still ended the month with a selling balance of MULC. in other words, Rural dollars are not enough to offset the increase in demand Due to greater seasonality and debt commitments designated in foreign currencies.
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In response to these difficulties, the former Minister of Economy Alfonso Platt-Guy considered necessary”Withholding taxes are now lowerThe combination of “because” Exchange rate delays and sharp falls in international prices threaten external accounts and reserves”.
“As Macri discovered at the end of his term, macroeconomic balance is not just about zero fiscal deficit. Defending external surplus and production is equally or even more important to ensure a macroeconomic balance that promotes development. Without growth, our fiscal balance It cannot be achieved.
In this sense, Prat-Gay proposes Soybean complex will be exempted from 10 percentage points, and 100% of the remaining grain export withholding tax will be refunded Through USD Treasury bonds maturing in December 2026 (equivalent to eliminating them within a maximum of 2 years)”.
To back up his argument, the economist stressed that the measure would immediately alleviate reserve concerns and produced a table showing the actual decline in Argentine grains so far in 2024: -43.4% soybeans; -44.6% corn; and -32.2% wheat.
most favored nation treatment
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