Argentina to Restrict FX Access for Oil Companies’ Imports

Argentina’s government will tighten access to the foreign exchange market for oil companies that need to import amid a severe shortage of dollars, according to people with direct knowledge, Bloomberg reported. Central Bank President Miguel Pesce, Energy Secretary Flavia Royon and other officials informed oil company executives Wednesday morning that they will be required to finance import payments for 90 days. The policymakers met with executives of Raizen, Axion, YPF and Trafigura at the monetary authority to discuss the changes. Oil companies must now obtain financing from international banks or their parent companies to pay for their imports. At the same time, the central bank may allow companies to deposit pesos in accounts or assets that adjust with Argentina’s official exchange rate. Central bank board members discussed the measure during their weekly meeting Wednesday. Last week, the central bank tightened import controls by requiring many industries to finance their own imports instead of tapping the central bank’s reserves via the official foreign exchange market. Until Wednesday, oil producers had thus far maintained access to the reserves as a means of importing. The South American nation has already spent all of its liquid international reserves, plus another estimated $1 billion, according to Buenos Aires-based consulting firm 1816 Economia & Estrategia. Read more.