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July 30, 2014
Wednesday, April 23, 2014

Dollar-buying spree slows down in April

Foreign exchange bureaus have been reinvigorated by the partial lifting of the dollar clamp.
By Francisco Aldaya
Herald staff

Daily rate made effective clocks in at US$7.378M, total exchanged at US$506M since Jan.

The average daily rate of dollars bought by citizens in the official market in the 13 working days of April stood at US$7.378 million yesterday, about US$818,000 below the daily average of US$8.196 million registered last month.
When the new dollars-for-savings scheme was announced on January 27, there was lots of speculation over the extent to which the measure was dished out as a crowd-pleaser in a post-devaluation context of people craving hard foreign currency for savings.
Yet the figures appear to show that demand for the savings dollar has waned parallel to the calming of macro-economic waters, with people and companies having adjusted to the peso’s depreciation.

At the time of the unveiling of the dollars-for-savings scheme there was concern about its potential strain on dwindling Central Bank (BCRA) foreign reserves, an issue the notorious clamp on the greenback — implemented in 2011 — had sought to address.

In the face of the strain caused by the ever-increasing gap between the official rate and the black market one it engendered, the clamp was partially lifted this year by incoming BCRA Governor Juan Carlos Fábrega.

Yet the scheme appears to be straining the reserves less than even the most optimistic projection.

And it also helped bring stability to the forex market, relative to last year, at least.

On the informal market, the dollar closed yesterday at 10.40 pesos, compared to 12.65 pesos on January 30, while the official rate traded steady at 8.01 pesos.

Reserves ended yesterday at US$27.816 billion, with the ongoing soy harvest also easing their depletion.

The final hurdle of the savings dollar implies that dollars withdrawn in cash are subjected to a technically refundable 20-percent surcharge, similar to that applied on credit card spending in foreign currencies.

At yesterday’s rates, this implied a “savings” dollar at 9.61 pesos, which logically reduces demand in the black market.

Although spikes in the average daily rate of transactions have been seen in the last one or two days of February and March, April’s average daily rate of transactions is unlikely to be skewed significantly.

Fewer requests made effective

With five working days left before the end of the month, 146,289 exchange requests have been approved and made effective, compared to the 303,949 in the first full month of the partial clamp lift, and the 233,478 in March.

To receive authorization to purchase dollars, residents must have earned above a minimum of 7,200 pesos per month for the last 12 months, with a maximum amount of dollars per individual set at 20 percent of his or her monthly earnings, as well as a limit of US$2,000 per month per person.

Those who leave their recently-acquired dollars in a local savings or fixed-term deposit accounts for 365 days are not subject to the AFIP surcharge.

Ninety percent opt to withdraw their greenbacks in cash.

Up to yesterday, a total 1,095,661 requests had been submitted to the bureau, including those already paid out, with 286,153 registered in the four days of January the measure was available, 355,264 in February and 277,358 in March

In April so far, 166,764 requests have been filed, leaving 29,316 yet to be doled out to partakers in the scheme.

Effect on reserves

Measured up to yesterday, US$506,503,792 million or 4.021 billion pesos had been exchanged as part of the scheme, meaning an average of US$9.209 million per working day.

A further US$117,207,513 million of approved exchange requests have yet to be paid out.

Hypothetically, if the daily average of US$9.209 million per working day is upheld for the 173 working days left of 2014, the BCRA’s reserves would be depleted a further US$1.593 billion.

With the INDEC national statistics bureau having recently confirmed that 75 percent of registered workers earn less than 6,500 pesos, approximately 2.3 million out of the country’s 11,574,000 workforce meet the requirements to apply.

@franma1990

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