Problems relating to Trade and Investment on Argentina

12. Exchange controls
Issue	Issue details	Requests	Reference

(1) Restricted Non-Deliverable Forward Transactions	- Argentine enterprises are permitted to deal in Non-Deliverable Forwards, etc. only with domestic banks in Argentina.	- It is requested that GOA deregulates foreign exchange control.
	(Action) - Non-Deliverable Forward (NDF) is the only means available for hedging risk from foreign exchange, as Forward Foreign Exchange Market does not exist in Argentina.

(2) Foreign Currency Purchase Scheme

- After acquisition of prior sworn affidavit (DJAI), due to CBA's restrictions on foreign currency purchase, MFS is unable to settle payment timely for import (or effect external payment). Restrictions on foreign currency purchase dictated by foreign exchange reserve are left to the CBA's sole discretion so that malady of vertically fragmented administration cannot be corrected.
- No registration at CBA is necessary for the commercial bank to purchase USD so that ostensibly anyone may purchase foreign currency. However, both individual persons and legal persons are disallowed to purchase foreign currency, unless authorised for external settlement with I/V. For example, purchase of foreign currency to defray the cost of overseas trip is disallowed.
- For foreign currency acquisition, it is necessary to obtain approval of the tax authority, additionally, with a limited cap per application.

- It is requested that CBA repeals restrictions on the purchase of foreign currency.

- http://www.bbc.com/news/
business-25913170

(3) Radical Fluctuations in Foreign Exchange	- As it stands, member firm's subsidiary (MFS) benefits from exchange gain on a direct export transaction in yen. Nevertheless, negotiation for raise in price is difficult. In a transaction with its parent company, the prevailing Yen depreciation enables MFS to offer special prices to its customers. However, MFS runs on a thin margin, so that if the exchange rate swings toward appreciation of Yen, it will instantly show operational loss: such is the severity of the fluctuation band.	- It is requested that GOP takes step to: -- stablise foreign exchange fluctuations, and -- holds the fluctuation band within a few percents in 6-months.
	(Action) - On December 2015, GOA introduced deregulation policy in foreign exchange, including the raised cap (maximum USD 2 million per month) for free purchase amount of foreign exchange, abridgement of the deposit period in the domestic bank account (120-days), repeal of automatic approval licence application to CBA on payment for import transactions, etc. Deregulation in foreign exchange control such as these has narrowed the gap between the official rate and unofficial market rates. - Financial Minister Prat-Gay announced the policy in principle of letting the exchange rate to free flow in the market.

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