The Central Bank of the Argentine Republic (BCRA) reported that it managed to close a US$1 billion repurchase agreement with five international banks to increase international reserves in the country.
The monetary authority said, in a statement, that the passive repurchase operation (REPO), with BOPREAL Series 1-D securities, matures in two years and four months. The banks that participated in the operation were not informed.
In addition, a reference rate applied to guaranteed loans issued in dollars (SOFR) plus a surcharge (spread) of 4.75% will be paid, limiting the operation to a fixed rate of 8.8% per year.
Reducing risks
The repurchase is seen by the central bank as a way of managing its liquidity in foreign currency at a lower cost than the options available on the market. “This new REPO tool increases the bank’s flexibility to mitigate imbalances that may exist between the supply and demand of currencies in the local foreign exchange market”, he states.
With this, the perspective is that the BCRA will reduce the risks involved in the implementation of its exchange rate and monetary policy objectives, facilitating the anchoring of economic expectations.
In 2024, the authority mentions that the effort to increase the liquidity position of its reserves has made it possible to guarantee the normalization of international trade payments. “In the goods market, this improvement avoided disruptions in the production chain and mitigated the adverse impact on domestic prices”, he says.
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Excess demand
The bank also recalls that offers of US$2.8 billion were received in the inaugural auction held on December 27th, almost triple the amount initially bid.
However, the authority states that, given the excess demand and considering the “favorable evolution” of its international reserves, it chose not to accept a higher amount than initially planned.
“The strong interest shown by the main international banks reinforces the process of normalization in access to international credit markets, in line with the fall in country risk that accompanies the consistent and sustainable macroeconomic order”, says the BCRA.
