The Central Bank of Argentina reinforces the stocks with the A8336 communication: a new turn in exchange policy.
In a movement that has shaken local financial markets, The Central Bank of the Argentine Republic (BCRA) issued on Friday the “A” 8336 communication, reinstating restrictions on the purchase of securities with foreign currency settlement. The measure, announcing in a hurried way at 13, seeks to stop the resurgence of the well -known “rulo” exchange, an arbitration mechanism that exploits the gap between the official dollar and the financial dollar. However, this decision could exacerbate exchange distortions in a context of uncertainty prior to October elections.
An attempt to preserve reservations in dollarization times
The new regulations arrive at a critical moment, where the government estimates that a significant part of the dollars liquidated in recent days could migrate to the financial market. If they dollarize in the financial market, we will have a gap growth, the stocks imposed on companies is the origin of this dynamic. The gap, in turn, encourages the “rulo”: buy dollars at the official exchange rate, sell them in the financial market and pocket the difference.
The BCRA, aware of the pressure on their reserves – which have been eroded by recent interventions to defend the weight – seems determined to avoid a massive currency exit. If the rulo returns, more demand is generated in the official dollar, and the Government wants to lose dollars for this mechanism, especially with the dollarization prior to the elections.
Immediate impact on financial markets
The market reaction was swift. Just hours after the announcement, the quotes of the MEP dollar and the dollar counted with liquidation (CCL) recorded increases between 4% and 5%, reflecting the expectations of a broader exchange gap. They will be able to dollarize the same in the financial ones, but at a higher price, the restriction does not eliminate the demand for currencies, but rather redirects it to more expensive channels. This phenomenon remembers historical patterns in Argentina, where BCRA interventions have tended to enlarge the differences between the official dollar and parallel exchange rates, feeding arbitration opportunities.
A curious detail of the measure was its last minute incorporation into the tender of financial instruments adjusted by dollar, an attempt to discourage dollarization. However, this strategy was probably not functioning as expected, which would have precipitated the issuance of A8336 communication. To the hurried, like almost everything lately
Stop as a source of distortion
This policy contrasts with the ads last April, when the Minister of Economy, Luis Caputo, promised to eliminate most capital controls as part of an agreement with the International Monetary Fund (IMF). That liberalization, backed by a loan of 20,000 million dollars, had temporarily reduced the gap. However, the partial reversal of these measures suggests that the government faces a dilemma: to balance investors’ demands with the need to protect reserves in a volatile electoral context.
Implications for investors
For investors, restriction reinstatement implies a panorama of greater volatility. The exchange gap, which has historically been an arbitration engine, could be extended again if the “rulo” persists despite the new rules.
On the other hand, the unclear of the regulations allows us to interpret that who bought dollars in the official market will not be able to buy assets in dollars (bonds or yield) in foreign currency for 90 days. So some clarification of the norm will be needed.
Meanwhile, companies face a scenario where access to the official dollar is, pushing them to operate in the MEP or CCL at higher costs.
Argentina is still trapped in a cycle of stock, gap and arbitration, a chess game where each movement seems to generate a new challenge. While the elections are approaching, the market will observe closely if this play manages to stabilize the pieces or if, on the contrary, a financial mate check precipitates.
Financial Analyst
Source: Ambito
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