Local IT firms now allowed to buy foreign currency at the official exchange rate

The Central Bank in Argentina has finally relaxed its foreign exchange (FX) regulations in favour of local information technology (IT) firms.

As a result, these local IT firms have been allowing their service exporters to buy foreign currency at the official exchange rate. The revised FX regulations have made it possible for freelance professionals working remotely for foreign companies to be freed from exchanging their salaries paid in dollars.

The news comes a month after suspicions arose that local IT firms could be parking a larger portion of their export earnings in bank accounts abroad instead of repatriating them to Argentina.

The previous regulations required service exporters to convert all their American dollars into Argentinian pesos at the official exchange, which gave them 106 pesos for US$1, while the parallel exchange gave 205 pesos.

This wide difference between the official exchange rate and the parallel exchange rate forced many freelancers to abandon their local employers for jobs in foreign firms that paid in US dollars. Such a practice dealt a devastating blow to the local economy, already hit hard by the volatile FX market and skyrocketing inflation.

This has resulted in Argentina taking a hit from undeclared FX with Bloomberg reporting that undeclared revenues from technology exporters have exceeded US$2.2 billion.

The Central Bank of Argentina reports that the benefit of this revised FX regulations extends to companies in the sector that will have unrestricted access to foreign currency for a percentage of the increase in foreign sales they make this year compared to 2021.