Circular LISOL 1 - 392: Global Net Foreign Currency Position. Exposure Limits

BANCO CENTRAL DE LA REPÚBLICA ARGENTINA
COMMUNICATION "A" 3889 07/03/2003
TO FINANCIAL ENTITIES:
Ref.: Circular
LISOL 1 - 392
Global Net Foreign Currency Position.
Exposure Limits

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We address you to inform you that this Institution adopted the following resolution:

“1. Establish, effective from May 1, 2003, that the absolute value of the global net foreign currency position - calculated as the monthly average of daily balances converted to pesos at the reference exchange rate - shall not exceed 30% of the computable equity responsibility of the month prior to the one in question.

When the global net foreign currency position is positive, the amount shall not exceed said ratio or liquid own resources, whichever is lower. Liquid own resources are understood to be the computable equity responsibility minus immobilized assets and financing to related clients, according to the criteria established in the respective technical report.

In the global foreign currency position, all assets and liabilities for financial intermediation in foreign currency and securities in foreign currency (for spot and forward transactions) shall be considered, including derivative contracts linked to these concepts, the items to be computed in the General Position of Exchanges, deposits in that currency in accounts opened at the Central Bank, as well as the gold position, time deposits in US dollars payable in pesos, and Letters of the Central Bank of the Republic Argentina in US dollars.

The value of the position in currencies other than the US dollar shall be expressed in that currency, applying the respective swap rate prepared by the Banco de la Nación Argentina.

Excesses against these ratios shall be subject to a charge equivalent to twice the nominal annual effective interest rate resulting from the tenders for Letters of the Central Bank of the Republic Argentina in US dollars or twice the LIBO rate for a 30-day term for operations in that currency, reported for the last business day of the relevant month, taking the higher of both.

To determine the charge based on the interest rate of the Letters of the Central Bank of the Republic Argentina, the accepted cut-off rate reported by this Institution shall be taken into account, which is expressed as a nominal annual effective rate, corresponding to the last tender carried out in the period under report.

If letters are awarded for different terms on the same date, the rate corresponding to the operation with the shortest term shall be considered.

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2. Admit that financial entities present to the Superintendence of Financial and Exchange Entities - no later than May 15, 2003 - compliance plans for the regulation referred to in the preceding point, in cases where it is foreseen that it will be impossible to observe the established limits.”

We greet you very respectfully.

BANCO CENTRAL DE LA REPUBLICA ARGENTINA
Alfredo A. Besio José Rutman
Manager of Emission Principal Manager of Norms of Norms