The BCRA has arranged a reverse repurchase agreement (reverse repo) with five leading international banks using BOPREAL bonds Series 1-D for a total auctioned amount of USD1,000 million for a term of 2 years and 4 months.
At the first auction held on December 27, 2024, the BCRA received bids for USD2,850 million, almost three times the amount auctioned. Given the excess demand and the favorable evolution of international reserves, the BCRA decided not to take a higher amount.
The strong interest shown by major international banks reinforces the process to normalize access to international credit markets, in line with the fall in country risk and the consistent and sustainable macroeconomic setting.
The BCRA will pay an interest rate equivalent to the SOFR-USD plus a spread of 4.75%. This is equivalent to an annual fixed rate of 8.8%, considering the fixed-floating interest rate swaps listed in the international market for the same term.
This reverse repo with BOPREAL bonds gives the BCRA a new tool to administer foreign currency liquidity at a lower cost than that offered by the options available until now. This new tool increases the BCRA’s flexibility to mitigate imbalances that may exist between the supply and demand of foreign currency in the local forex market. This way, the BCRA reduces the risks connected with the implementation of the foreign exchange and monetary policy objectives, and facilitates the anchoring of economic expectations.
The BCRA’s sustained effort to increase the reserves’ liquidity position ensured the normalization of international trade payments during 2024. In the goods market, this improvement prevented disruptions in the production chain and mitigated the adverse impact on domestic prices. Contrary to what occurred during past economic crises, thanks to the improvement in liquid reserves all public and private sector financial obligations in foreign currency were met, both those payable in the year and those corresponding to unpaid amounts from previous years.
The continued improvement of the BCRA’s international liquidity position through different channels is a necessary condition to move towards the goal of completely lifting foreign exchange restrictions and other regulations implemented in previous years, without financial or economic disruptions. The BCRA keeps on expanding the options to strengthen its balance sheet, and to simultaneously recover and preserve the external and internal conditions of macroeconomic equilibrium.
