Argentina to enforce sale of grain export dollars to support peso

Argentina announced a measure on Wednesday to support the local peso currency by strengthening its rule that grains exporters sell the foreign currency they get from sales of soybeans, soy byproducts, wheat, corn and other agricultural commodities.

Exporters have only 15 days to convert export dollars into pesos. To enforce that rule, the government says it will be enforced by temporarily banning companies that do not comply with it from being allowed to continue to export.

“Companies must liquidate foreign currency resulting from their shipments within the term stipulated by the state,” the government said in a decree published in its official gazette.

The government is trying to encourage businesses and average Argentines to save in the local currency rather than seeking safe-haven dollars as they contend with a recession that has been further complicated by the coronavirus pandemic, high inflation and foreign exchange uncertainty.

The peso has weakened 26.47% this year to 81.47 per dollar.

The head of Argentina’s grain exporters and processors chamber CIARA-CEC, Gustavo Idígoras, told Reuters that he was satisfied with the new enforcement measure.

“We welcome all the measures that give more guarantees to the government in order for it to have a full control of the enforcement of current regulations,” he told Reuters.

In 2019, agro-export companies in Argentina shipped soybean oil and meal for a total of $12.25 billion dollars, according to government data. Argentina is a major soybean, corn and wheat exporter as well as the world’s top supplier of soymeal used to feed hogs and poultry from Europe to Southeast Asia. (Reporting by Maximilian Heath; Writing by Hugh Bronstein; Editing by Sandra Maler)

Reuters

Tags: grain export