BCRA tightens capital controls further
The reintroduction of currency controls in late 2019, which have since been tightened dramatically, spawned a number of parallel markets for foreign exchange. Chief among these is the Contado con Liquidación CCL), or blue-chip swap market, which allows investors to purchase assets in pesos and sell them overseas for US dollars. With official access to foreign currency highly restricted, retail investors and businesses alike have used CCL operations to dollarise their portfolios and get their money out of the country.
Under the new rules announced by the BCRA, settlement of CCL operations can no longer take place through custody or third-party accounts. This will effectively shut off the CCL market to individuals and firms that do not have bank accounts abroad and were using brokerages to conduct these transactions. The official reason behind the change is to clamp down on money laundering and tax evasion. However, it is clear that the BCRA also wants to curb the volume of CCL transactions.
The authorities hope that reducing the scope for CCL transactions will help to contain the black-market premium for foreign exchange. In recent weeks the BCRA has been forced to step up intervention in parallel currency markets, depleting its stock of foreign reserves in the process. Allowing the gap between official and parallel exchange rates to widen unfettered is not really an option, as this would stoke already high inflationary pressures (12-month inflation stood at 52% in July).
Ultimately, however, the BCRA's new regulations do little to address the underlying problem: a lack of confidence in the peso. As a result, demand for US dollars is simply recalibrating, moving from the CCL market to the over‑the‑counter (OTC) exchange market, which is harder to regulate.
Our forecasts had already taken into account the macroeconomic distortions created by a large black-market premium for foreign exchange. We expect central bank intervention in currency markets to continue until the November mid‑term elections, after which the authorities will seek to gradual unify the multiple exchange rates. However, given the BCRA's limited stockpile of foreign reserves, the risk of a currency crisis will be high.