Buenos Aires — In a bid to avoid a sharp devaluation before the end of the year, the Argentine government is determined to meet some requests from some productive sectors to improve their competitiveness in order to increase their exports and allow the Central Bank (BCRA) to recover reserves.
To that end, Economy Minister Sergio Massa announced on Saturday the implementation of an export strengthening mechanism for the country’s regional economies, starting with the wine industry, and which will imply a new differential exchange rate for wine exports, the so-called ‘Malbec dollar,’ in reference to te grape variety and which is the most widely-used in Argentine wine.
The ‘Malbec dollar’ will enter into force from April 1 and remain in place until at least the end of the year, government sources confirmed to Bloomberg Línea.
This is a much longer time window than those for the so-called ‘soybean dollar’, while the government has yet to announce the differential value for the ‘Malbec dollar’, and which will be defined in meetings to be held during this month with representatives of the sector.
The program is expected to last for at least nine months, and the agreed exchange rate will likely have some adjustment mechanism given the expected inflation levels for the year.
Why the window for the Malbec dollar will be wider
Unlike with soybeans, the bulk of exports made by Argentina is not concentrated on the commodity of the vine itself, with the harvest taking place between February and April). Salvador Vitelli, economist and agribusiness specialist at Romano Group, explains that since wine is exported as a finished product rather than as a fruit, and which even improves in price according to the type of wine and storage conditions, it makes sense that the program is extended for a longer period of time.
According to his estimates, during 2022 wine exports totaled $1 billion, but continue to decline from the record figures seen a decade ago.
At the beginning of January, the Argentina’s national institute of viticulture (INV) had anticipated that wine exports would fall 8% in 2022, to $825.5 million, but the drop was in fact 6.6%, to $768.6 million.
Argentina exported 265.7 million liters of wine in 2022, a decrease of 21% compared to the volumes of the previous year. Of this total, 198.2 million liters (74.6%) corresponded to bottled wines, down by 10%, while the remaining 25.4% (67.5 million liters) corresponded to bulk, a fall of 41.8%.
