Foreign Exchange News

1.    Exemptions to mandatory deposits

In order to give some liquidity to the local exchange market during the international financial crisis, the Argentine Ministry of Economy (“Ministry of Economy”) exempted Kraft Foods Argentina S.A. and Toyota Compañía Financiera de Argentina S.A., from some of the requirements established by the local regulation for the inflow and outflow of foreign currency.

Resolution No 35/2009, in force as from February 02, 2009 of the Ministry of Economy, exempted from the 30% Mandatory Deposit provided in Decree No 616/2005 (“Mandatory Deposit”) the inflow of funds for an amount of US$ 10,000,000 to be disbursed under a loan granted by Kraft Foods International to Foods Argentina S.A. Those funds should be allocated to invest in non-financial assets.

In addition, Resolution No 38/2009, in force as from February 04, 2009 from the Ministry of Economy, exempted from the Mandatory Deposit the inflow of founds for the amount of U$S 15.000.000 from a credit granted to Toyota Compañía Financiera de Argentina S.A. from its shareholders Toyota Motor Credit Corporation and Toyota Financial Services Americas Corporation, that would allow Toyota Compañía Financiera de Argentina S.A. to continue providing financial assistance to its Argentine clients.

Income of foreign currency of non-residents

Through Communication “A” 4,901, in force as from February 5, 2009, the Central Bank established that the inflow of foreign currency from non-Argentine residents to the exchange market would be exempted from the Mandatory Deposit when:

(i)           The Pesos purchased in the exchange market are applied within the following ten business days to concepts that qualify as “international account transactions”; (e.g. tax payments, provisional contributions, medical assistance and any other services made by Argentine residents).

(ii)           Transfers of funds from non-Argentine companies to local companies for tax payments made of behalf of officers of the later that are momentarily outside Argentina, provided that: (a) the funds are deposited in a special account of the local company; and (b) an agreement between the foreign transferor and the company specifying the scope of services rendered by the local company

2.    Changes in foreign exchange regulations applicable to exports’ advance payments and pre-export financings

Through Communication “A” 4,902, in force as from February 5, 2009, the Central Bank reduce to a one year period the minimum term for medium and long term credit facilities (section 6 of Communication 4443) settled in the local foreign exchange market. This regulation also allows prefinancing granted by parents and subsidiaries to be settled as such in the foreign exchange market.

Communication “A” 4,907, in force as from February 12, 2009, extends from 60 to 180 days the additional term in which financial entities in charge of following export advance payments and pre-export financing, may grant for shipment upon the occurrence of certain circumstances.

3.    Restrictions to the transfer and sale of securities

The Argentine Securities Commission (“CNV”) issued Resolution No 548/2009, in force as from February 6, 2009, which established that self-regulated entities under its supervision should (i) issue the necessary regulation to make intermediaries working in the entities allow only the sale or transfer of securities into the account of the person ordering that operation when the seller can prove to have maintained the security for at least 72 business hours following the date of incorporation of the securities into the client’s account; and (ii) maintained the securities in the ordering client’s account.

This Resolution intends to eliminate some common practices noticed after Resolution No 239/2008, implementing new requirements to the sale or transfer of securities.

Resolution No 551/2009 issued by the CNV, in force as from February 19, 2009, and Circular No 87/2009 of the Electronic Market (“MAE”) explains in detail some terms use in Resolution No 548/2009, such as ownership, possession periods or transfer of securities.