The Argentine Minister of Finance, Alfonso Prat Gay, announced the end of restrictions on foreign exchange transactions as of Thursday, 17 December 2015. The measures taken revert the regulatory foreign exchange framework to that in effect in November 2011.

These changes resulted in a devaluation of the Argentine Peso vis-à-vis the United States Dollar, with the exchange rate dropping from ARS 9.81 to USD 1 down to ARS 14 to USD 1. This was within the expected range.

Under the new scheme, individuals and companies will have access to the exchange market through their bank accounts without having to seek any prior approval from the Federal Tax Administration, with the USD 2 million monthly limit on foreign purchases, which existed prior to the 2011 changes.

The Government planned to mitigate the impact of these changes, with several lines of funding to raise between USD 15,000 and USD 25,000 million to strengthen the Argentine Central Bank reserves. Among them, is the commitment of the grain exporters to liquidate USD 400 million per day over the next three weeks, which will add USD 2 billion per week to the Central Bank’s reserves.

Nowadays, existing commercial debts deriving from pending import, dividend and royalty payments amounts to USD 5 billion. In order to cancel these pending payments, the Central Bank is considering setting a timeframe for local companies to have access to foreign currency for this purpose.

Also, the possibility of issuing bonds in dollars is also being analyzed, so that the accumulated flows of remittances aren’t settled in the first several weeks.

Finally, the Government anticipated that part of the currency swap with China would be converted from Yuan into United States Dollars so that available Central Bank reserves are strengthened.