Amendment to the Foreign Exchange Regulations on Settlement of Export Advances | Communication "A" 5225 of the Argentine Central Bank

Effective as from September 13, 2011, the amendments to Communication "A" 4443 of the Central Bank (as supplemented), within the framework of rules governing the Single Free Foreign Exchange Market (MULC), lay down certain rules to be followed for the settlement of advances made by clients for exports of residents, and pre-export financings received by residents.

Prior to the issuance of Communication "A" 5225, Communication "A" 4443 (as supplemented) had stated that exporters were able to settle advances for exports in the MULC without meeting the reserve requirement (a 30% mandatory deposit, or encaje) and the minimum stay term (365 days), provided that the exporter had no delays in prior shipments, according to the regulatory terms, or that the delay had been rectified.

As from Communication "A" 5225, any exporter may settle advances for exports made by foreign customers in the MULC, without complying with the mandatory reserve and the minimum period of stay, even if the exporter has delays in prior shipments as mentioned above.

This release is only limited to the settlement of advances. If the exporter had any delay in prior shipments, same would not be able to settle new pre-export financings, since such restriction would still be in place.

It is expected that lifting this restriction will generate a more dynamic flow of currencies in the local exchange market.