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Argentina's depleted FX reserves get timely soybean boost

Economy Sep 09, 2022 10:16AM ET
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2/2 © Reuters. FILE PHOTO: Soy plants are seen at a farm in Carlos Casares, Argentina, April 16, 2018. Picture taken April 16, 2018. REUTERS/Agustin Marcarian 2/2

By Jorge Otaola

BUENOS AIRES (Reuters) - Argentina's central bank is set to end the week with over $1 billion of foreign currency purchases, boosted by a government drive to stimulate soybean exports, the country's main cash crop, to bring in much-needed dollars.

Up until Thursday, the bank had bought some $866 million, a sharp turnaround from recent weeks where it has been forced to sell dollars to protect the peso currency and with high energy import costs through the southern winter.

The government on Sunday unveiled a preferential exchange rate for soy exporters to convert dollar earnings to pesos, unlocking a rush of sales. The government has also threatened higher financing rates for soy farmers hoarding their stock.

The central bank bought a net $426 million as of Thursday, traders said. The government is hoping to build up foreign currency reserves by as much as $5 billion this month. Argentina is the world's top exporter of processed soy oil and meal.

"The 'soybean dollar' has shown positive results in terms of bringing in foreign currency, to which is added new external financing by organizations that should contribute to reinforcing reserves," consultancy Estudio Ber said.

GRAPHIC: Soy sales boost reserves https://graphics.reuters.com/ARGENTINA-ECONOMY/gkvlgnbyopb/chart.png

Argentina's depleted FX reserves get timely soybean boost
 

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