Amid soybean crunch, Argentina loosens foreign currency controls for imports
Aug, 30, 2023 Posted by Gabriel MalheirosWeek 202336
Argentina’s agriculture secretariat said on Tuesday (August 29) that grain exporters can keep 25% of the foreign currency they generate in September to import soybeans. By doing so, Argentina is loosening currency controls to address the grain’s scarcity.
“Exporters in the industry will be allowed to freely dispose of 25% of the foreign currency for 30 days in order to … guarantee the purchase of soybeans,” Agriculture Secretary Juan Jose Bahillo said during a press conference.
Currently grains exporters have to convert all dollars earned by exports into pesos within a strict time limit and at an officially agreed exchange rate.
Argentina is one of the main world exporters of soybean oil and meal, but a historic drought has cut the domestic harvest of soybeans for the 2022/23 season by half, driving the need to import soybeans to be processed for export. Soybeans imports are up 700% this year, according to official data.
The South American country is facing a complex economic environment, with a large fiscal deficit, scant central bank reserves, triple digit inflation and falling economic activity due to the drought that has pummeled the farming sector.
The government, which has previously offered the farm sector preferential exchange rates to encourage exports, also tightly regulates access to foreign currency to pay for imports.
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