Circular Foreign Exchange Operations and Movement of Funds and Securities with the Abroad - CAMEX 1 - 8

BANCO CENTRAL DE LA REPUBLICA ARGENTINA
COMMUNICATION "A" 44 03/07/81
TO FINANCIAL ENTITIES AUTHORIZED TO OPERATE IN EXCHANGE AND EXCHANGE BROKERS:
Ref: Circular FOREIGN EXCHANGE OPERATIONS AND MOVEMENT OF FUNDS AND SECURITIES WITH THE ABROAD - CAMEX - 1 - 8. We address ourselves to you, and through you to all interested parties, with reference to the provisions made known by Circulars CAMEX - 1 - 2 (Communication "A" 31 of 5.6.81) point 4 - and CAMEX - 1 - 5 (Communications "A" 36 of 17.6.81) related to the determination of the rate of foreign exchange insurance, which are contracted pursuant to the aforementioned norms and that will be applied after the first 180 days of their validity. On this matter, and for the purpose of enabling credit takers to have an option for the application of two different rates after the first 180 days of the validity of the contracts, it has been resolved that local borrowers may decide at that time and for the remaining period, between the rate established by Circular CAMEX - 1 - 5 (Communication "A" 36 of 17.6.81) and the one that arises from the difference by quotient between the rates of variation, that the financial adjustment index (Circular R.F. 1050) and the LIBOR rate at 30 days register, which for this purpose will be elaborated with the same methodology. For illustrative purposes, an example of the procedure to be applied is added, in Annexes I and II. We greet you very attentively. BANCO CENTRAL DE LA REPUBLICA ARGENTINA Horacio A. Alonso Evaristo H. Evangelista General Manager General Manager ANNEXES

B.C.R.A. EXAMPLE Annex I to
Com. “A” 44
The object of this example is to show how the adjustment index of the foreign exchange insurance by interest rates is elaborated. For this it is necessary first to elaborate an index of the LIBOR rate at 30 days with the same methodology of the financial adjustment index (Circular R.F. 1050) In Annex II the LIBOR rate at 30 days appears from 28.5.81. This rate will be transformed into an equivalent daily rate; for example, for 18.6.81, based on the annual rate, which was 18.55 %, we have as the monthly rate:
18,55 % x 30
= 1,5458 %
360
The equivalent daily rate is:
30
((100 + 1,5458)/100) 100 – 100 = 0,0511 %
Following then the methodology of Circular R.F. 1050 the variation of the LIBOR rate index is 0,0511 % for the day 20.6.81, since the equivalent daily rate must correspond to the second previous business day to the date of the index. The LIBOR rate index, thus calculated, is also included in Annex II. Disposing of the financial adjustment index and the adjustment index of the LIBOR rate at 30 days, the adjustment index of the foreign exchange insurance by rates can be elaborated, from the following formula:
ISCt = (IFt / Ifo) / (ILt / ILo)
ISCt : adjustment index of the foreign exchange insurance by rates on date t.
IFt : financial adjustment index on date t.
Ifo : adjustment index on the base date.
ILt : adjustment index of the LIBOR rate at 30 days on date t.
ILo: adjustment index of the LIBOR rate at 30 days on the base date.
For the calculation of the exchange adjustment index that is included in the table of Annex II, the base date has been taken as 31.5.81, in which the financial adjustment index takes the value 255,3379 and that of the LIBOR rate at 30 days 100,0000. Therefore, the exchange cost, for example, between 31.5.81 and 30.6.81 is given by the variation of the adjustment index of the foreign exchange insurance by interest rates between those two dates or is 7,6605%.

B.C.R.A. RESULTING RATE Annex II to
Com. “A” 44
EXAMPLE
LIBOR Rate 30 days Index
Annual Daily equivalent
Adjustment
Period Of the rate
LIBOR at 30 days
Financial
Circ. R.F. 1050
Of the insurance exchange
(In %)
1981 1981
May. 28 18,48 0,05096 May.31 100,0000 255,3379 100,0000 29 17,95 0,04950 Jun. 1 100,0510 256,0646 100,2335 Jun. 1 18,49 0,05095 2 100,0999 256,7989 100,4718 2 18,21 0,05022 3 100,1509 257,5400 100,7105 3 17,37 0,04792 4 100,2012 258,2856 100,9514 4 18,76 0,05172 5 100.2492 259,0397 101,1976 4 18,76 0,05172 6 100,3011 259,8119 101,4468 4 18,76 0,05172 7 100,3530 260,5864 101,6965 5 19,19 0,05290 8 100,4049 261,3632 101,9470 8 19,67 0,05421 9 100,4580 262,1519 102,2006 9 18,72 0,05161 10 100,5125 262,9646 102,4618 10 17,44 0,04811 11 100,5644 263,7790 102,7261 11 18,45 0,05087 12 100,6128 264,6232 103,0053 11 18,45 0,05087 13 100,6640 265,4701 103,2824 11 18,45 0,05087 14 100,7152 266,3197 103,5603 12 18,42 0,05079 15 100,7664 267,1720 103,8389 15 18,98 0,05323 16 100,8176 268,0270 104,1183 16 17,82 0,04915 17 100,8703 268,8888 104,3985 17 17,03 0,04698 18 100,9199 269,7493 104,6811 18 18,55 0,05115 19 100,9673 270,6077 104,9649 18 18,55 0,05155 20 101,0189 271,4762 105,2480 18 18,55 0,05115 21 101,0706 272,3475 105,5318 19 19,95 0,05498 22 101,1222 273,2216 105,8165 22 19,51 0,05377 23 101,1779 274,1068 106,1009 23 18,88 0,05205 24 101,8266 275,0256 105,7783 24 17,37 0,04792 25 101,8796 275,9632 106,0837 25 18,52 0,05106 26 101,9284 276,9099 106,3967 25 18,52 0,05106 27 101,9805 277,8715 107,7116 25 18,52 0,05106 28 102,0325 278,8365 107,0276 26 19,43 0,05355 29 102,0846 279,8048 107,3445 30 102,1392 280,7790 107,6605 NOTE: Financial adjustment index Cir. R.F. 1050. Base 1st of January 1980 = 100