Argentina Treasury & FX update

Report date: 
31 Jan 2022

Chair's commentary

The Argentina saga continues, though there seems to be some evidence of stabilisation.

Inflation continues at about 50% per annum.

It seems to be reasonably possible to get hard currency to pay for imports from third parties, as long as the import has been properly registered and approved, is from a third party, and is more recent than March 2021.

On the other hand, it is very difficult to get approval for intercompany remittances, even if these are for goods. Old outstanding balances are basically frozen, with very little progress on remitting them out.

Currency hedging is difficult to obtain, and prohibitively expensive. Most participants have given up trying to hedge peso/dollar exposures.

Most people are seeing significant build ups of peso cash. It is difficult to earn a decent return on this cash – maximum interest paid tends to be between 20% and 30%, i.e., a net loss of value of 20% after inflation. Some foreign banks, such as Citi, will not accept peso deposits.

This situation can lead to significant P&L exposure, as companies record FX losses on their dollar denominated liabilities – especially the intercompany ones.

Most participants continue to do business in Argentina, because it is viewed as a strategic market. Also, many have to support international customers, who do business there. 

As always, our members are adopting a series of interesting and innovative measures to cope with this situation. There is a lot of detail below – the quick summary is:

One participant is buying peso bonds which are indexed to the dollar. They view this as an effective hedge against currency depreciation. Others viewed the risk/reward ratio as not being attractive.

Several participants are moving to have their customers purchase directly from their headquarters operations. This avoids the restrictions on settling intercompany invoices, and allows the use of letters of credit.

Some participants invoice their domestic sales in USD. This is allowed, though the invoices can only be settled in pesos, using the exchange rate on the day. This actually encourages customers to pay early – some even pay in advance.

Some have exports from Argentina: these can be used to provide some measure of natural hedge, but there are strict rules about collecting export invoices.

It is not unusual to add a buffer in pricing, to manage the currency risk

No bank was singled out by several participants as being especially helpful, though most are satisfied with their international relationship bank. Some participants find they get extra service from local banks.


This report was compiled by Monie Lindsey. based on a Treasury Peer Call chaired by Damian Glendinning.

Topics covered in this report: 
Inflation, Payments - cross border, Payments - intercompany, Cash - deposits, Hedging FX, Bonds - US dollar linked, Cash Repatriation, Contado con Liqui, Blue chip swap, Invoicing
Service providers discussed in this report: 
Banco de la Nacion Argentina, Banco Galicia, BBVA, BNP Paribas, Citi, HSBC, Santander, ICBC

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