Record dollar inflow charges at BCRA

Handsome amounts of dollars are coming in emerging markets. In Argentina, foreign funds seek to humble Argentine Central Bank (BCRA, in its Spanish acronym) and its desire to sustain exchange rate. The entity buys dollars, increases reserves and then withdraws from market all Argentine pesos issued with papers like LEBAC and NOBAC (its Bills of Exchange and Securities).

However, these papers yield more than 10 per cent in pesos in one year time, only attracting more foreign dollars. In this way, the process starts again. At some point, government will have to give in and let dollar fall. Otherwise, price hike will be higher than 15 per cent.