Central Bank of Argentina
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The Central Bank of Argentina (Spanish: Banco Central de la República Argentina, BCRA) is the central bank of Argentina.[1]
Founded in by six Acts of Congress enacted on 28 May 1935, the bank replaced Argentina's Currency Board, which had been in operation since 1899. Its current president is Martín Redrado.
During the years of the Convertibility Law, which established a 1:1 fixed exchange rate between the Argentine peso and the United States dollar, the BCRA was mainly in charge of keeping foreign currency reserves in synch with the money base.
Since the repeal of the Convertibility Law, the devaluation and depreciation of the peso and the end of the economic crisis, its role has been the accumulation of reserves in order to gain a measure of control of the exchange rate. The BCRA buys dollars from the market to neutralize the large surplus of the foreign trade balance and keep the exchange rate at the level desired by the government, currently around 3.1 pesos per dollar, considered internationally competitive for exports and useful to encourage import substitution (see Foreign trade of Argentina).
Near the end of 2005, President Néstor Kirchner vowed to pay the Argentine public debt with the International Monetary Fund in a single, anticipated disbursement. The payment was effected on 3 January 2006, employing about 9,500 million USD from the BCRA's reserves. This decreased the amount of reserves by one third, but did not have harmful side effects save a slight increase in the dollar-peso exchange rate.
The BCRA continues to intervene in the exchange market, usually buying dollars, though occasionally selling small amounts (for example, reacting to rumours of a possible increase of the Federal Reserve's reference rate, which caused a minor spike in the dollar's value). Its reserves reached more than 28,000 million USD in September 2006, recovering the levels prior to the IMF payment, and rose to 32,000 million at the closing of the year. The exchange rate experienced a gradual increase prompted by the BCRA's market intervention as a buyer, reaching 3.12 pesos per dollar, and then decreased slightly again. [2] [3]
In its October 2006 issue, the influential Global Finance magazine gave Martín Redrado, head of the Central Bank, a D grade in its survey of global central bankers. The magazine holds that Redrado "missed the opportunity to act to curb inflation when the economy was expanding at its fastest ... with inflation expected to reach 12% in 2006, up from 7.7% in 2005 and 4.4% in 2004." Inflation for 2006 eventually amounted to 9.8%, helped by price controls, though the public's perception of it was higher due to the composition of the sample used to measure it.[4] The BCRA obtained exceptionally high returns on investment funded by its reserves, for a total of 1.4 billion USD (a yearly rate of 5.7%) in 2006.[5]
[edit] See also
[edit] References
- ^ (Spanish) (English) Banco Central de la República Argentina. Official website.
- ^ La Nación, 17 June 2006. Las reservas llegan a US$ 25.000 millones.
- ^ La Nación, 27 September 2006. El Central recuperó las reservas del pago al Fondo Monetario.
- ^ La Nación, 5 January 2007. La gente percibe mayor inflación.
- ^ La Nación, 7 January 2007. El BCRA obtuvo un rendimiento récord de las reservas internacionales.
