Argentina revives 'soy dollar' FX rate until year-end to boost reserves

BUENOS AIRES (Reuters) - Argentina on Friday announced a more generous exchange rate for U.S. dollars brought in through soy exports until the end of the year, seeking to rev up exports of its top cash crop and bring much-needed dollars to central bank coffers.

FILE PHOTO: A combine harvester is used to harvest soybeans on a farmland in Chivilcoy, on the outskirts of Buenos Aires, Argentina April 8, 2020. Picture taken April 8, 2020. REUTERS/Agustin Marcarian/File Photo

The 230 pesos per U.S. dollar exchange rate for soybeans and their derivatives will start on Monday, Economy Minister Sergio Massa said following a meeting with farm sector leaders. Currently, the official rate hovers around 165 pesos.

“We’re doing this with the conviction that by aligning incentives it will allow us to strengthen reserves,” said Massa, who anticipated collecting at least $3 billion.

The policy is aimed at encouraging exports as many Argentines fear further weakening of the local currency amid sky-high inflation, and some farmers have preferred to keep soybeans in storage versus selling at unfavorable terms.

Argentina is the world’s top exporter of processed soy oil and meal, as well as a major global supplier of corn and wheat.

The country’s central bank is looking to bolster its international currency reserves, needed in large part to meet debt payments.

In September, the government dramatically boosted soy exports with its earlier “soy dollar” policy when exporters could tap a rate of 200 pesos per dollar, compared to an official exchange rate at the time of around 150 pesos per dollar.

The latest “soy dollar” rate includes an inflation update, one source told Reuters.

The September measure brought in almost $8 billion to the country, with around $5 billion remaining in central bank reserves.

The latest move generated some opposition from the country’s agricultural sector.

Carlos Achetoni, president of the Argentine Agrarian Federation, said earlier on Friday he would not attend the meeting with Massa, insisting that the government policymakers should end the proliferation of multiple exchange rates.

“You have to look for a single (exchange) parity,” he said.

(The story has been refiled to insert dropped word “exports” in fourth paragraph).

Reporting by Eliana Raszewski; Writing by Adam Jourdan; Editing by Daniel Wallis, Josie Kao and Cynthia Osterman