The government is in a crossroadsbecause if the Official dollar Touches the upper band (Something with what has been flirting last week after the electoral setback in PBA), The Central Bank (BCRA) would have to start selling currencies to sustain the current schemewhich would complicate the position of the treasure for its next maturities. Is that if the current level of country risk (above 1,100 points)access to International credit market is discardedand there is no other that hacienda goes out to buy currencies, which scenario of another devaluation and an extra inflationary pressure.
“Sell dollars of the IMP deteriorates the ability to pay the debt and increases the probability of rupture of the exchange scheme. The sale of reservations can accelerate the demand for dollars. A breakmaking of the scheme cannot be ruled out before the elections“, they alerted this week from The CP consultant. What happened these last five days was that, after the fateful elections for Lla in Buenos Aires Arenas, the pressure DOLARIZADORA It increased and the exchange rate was shot from the upper band, currently $ 1,472, which implies that the BCRA has to sell IMF reserves.
But selling reservations has a very high risk when the available flow to do it is not its own. It should be remembered that liquid reserves is the amount available by the BCRA to defend the exchange scheme that is currently around U $20,000 million. However, “These dollars do not really belong to the BCRA”they warn from CP but come “Of the savers (lace of the deposits in dollars of the financial system) and especially of the contribution of the IMF loan.”
Treasury maturities press: Is the exchange scheme in danger?
City numbers warn that The Treasury stayed with US $ 1,100 million, after intervening in the Mulc the week prior to the elections But it faces heavy maturities: U $ 3,000 million until the end of the year, US $ 4,200 million in January and for US $ 14,000 million during the rest of 2026.
“With the exchange rate at these levels, You can’t buy reservations without taking it to the upper band (where you should sell). With the country’s risk above 1,000 points, you cannot access rollover. With rates in current pesos, you can’t place Bonte. And with political uncertainty, cannot expect the rigi projects or privatizations to progress“They alerted from Vector.
In summary, for experts behind this report, the Government’s strategy of “all or nothing” led him to a alley where he must choose the least of the costs: Do not get the resources to pay your debt or modify the “flotation with bands” exchange scheme.
From the Economic Studies Management of the Province Bank, the look is similar: This scheme does not become sustainable in the medium term. “In the next twelve months, there are debt maturities in foreign currency for US $ 19,000 million: almost half of the current gross reserves (US $ 40,350 million). With current account deficit, without productive investments or market financing or multilateral organizationsthe scenario will be complicated in the coming months. And hence the market does not perceive the band scheme, nor the real exchange rate level “they added.
The market already looks beyond October: what a variable that the government could sacrifice
With a weakened government, in Cohen they warn that the market already discounts a higher risk premiumreflected in Doubts about the governance and sustainability of the economic program. “In this context, the electoral trace loses strength and the looks are concentrated in the medium -term perspectives, where the result in the province of Buenos Aires configures a high floor for the PJ and raises a more adverse scenario for freedom to advance a favorable outcome, “they warn from Cohen.
For them, The central question is what dynamic could be imposed in the markets from this scenario. “A unfundant result of the ruling would reinforce distrust, with a country risk that would be far from giving up the current levels. Given the absence of capital account income, external balance should be achieved by means of a real exchange rate rise and a greater accumulation of reserves by the BCRA “with which, if sustained, it would imply that Official dollar is located above the roof of the band, with the consequent risk of an inflation acceleration.
Source: Ambito
