The National Securities Commission (CNV) formalized this Wednesday the change to the mechanism for the purchase and sale of bonds denominated and payable in dollars, through which access to MEP dollar and CCLto avoid the “loop” that investors were making from government intervention to control the value of currencies in the financial market.
With general resolution 962/23 published in the Official Gazette, from this Wednesday anyone who buys MEP or CCL dollars through AL and GD bonds they won’t be able to use those dollars to buy other dollar goods. They can only send these currencies to the bank or convert them back to pesos, again through the same AL and GD bonds. If they want to use those dollars to buy other goods, have to wait 15 days.
This is how the government has found out avoid the curl which consisted of buying cheap MEP (“subsidised” by the Government so that it does not trigger) and then with those dollars to sell them with the reverse mechanism but through non-subsidised instruments, an operation which has come to give a profit of 5% weekly or 20% monthly.
The regulation states that “orders may be given to arrange transactions with settlement in foreign currency or to transfer negotiable securities to or from abroad, only if in the previous 15 calendar days the customer has not carried out any sale of negotiable fixed-income securities named and payable in dollars issued by Argentina under local or foreign law, with settlement in foreign currency, in the competitive segment of the price-time priority offers and, likewise, that there is a reliable declaration not to do so in the next 15 calendar days “.
The president of CNV, Sebastián Negri, had stated on Tuesday that “RG 962 does not change anything the usual operations of 99% of those who do MEP and CCL”, and had underlined that “what does, like its antecedent, the RG 907, is to avoid arbitration due to price differences between government bonds and other instruments, as has been reported in recent days, distorting the market“.
After two weeks of daily interventions in the MEP, through the purchase of bonds in dollars and their sale in pesos, The Central Bank suddenly stopped this operation last Thursday, to avoid ensuring the business of those who worked as hedgehogs on a daily basis.
The government surprised the market when the Central Bank did not appear on the bond wheel as a buyer, which sent the Euro MP up nearly 7% in one day.
The market’s first reading was that this reaction was in response to the continued decline in reserves. But official sources at the time clarified that this decision was taken to “stop a loop” that had been occurring in the City since the Central Bank began to intervene in financial dollar prices in late April.
Charles Arterburn is a seasoned business journalist for News Rebeat, where he provides comprehensive coverage of the latest trends and developments in the world of finance and economics.