After the official dollar exceeds the ceiling of the flotation bands, the Central Bank (BCRA) had to sell currencies for the first time in five months. This way, The monetary authority seeks to provide credibility to the exchange scheme, and thus trace a greater offer from the private sector, although the doubts of the market persist and after the elections October, which can complicate government plans.
From the elections in the province of Buenos Aires, the wholesale exchange rate jumped $ 119.50 (+8.8%) to close Wednesday in the $ 1,474.50practically in the upper top of the band regime. In line with its position of only intervening when the price crosses the established limits, The BCRA detached in the day of US $ 53 million To trace the downward price.
“While selling little, the central man had an order of sale of US $ 1,000 million,” he said Nicolás Cappellaof IEB. The financial analyst added that, before that order, a lot of presence of private offer was observed, for which “The key to the next few days will be to see if the private ones continue to put many sales orders, knowing that the BCRA will defend the band“
The BCRA began selling dollars: credibility or weakness?
Faced with the official intervention, the economist Andrés Salinas held in dialogue with Scope that “this gives credibility to the BCRA” for his commitment to the exchange scheme, which had already led him not to buy reservations when the dollar was closer to the lower band, despite “perhaps it was convenient to do so.”
Just because of that decision not to accumulate reservations at the time is that Guido Zack, Economy Director of Fundar, It does not see the recent participation of the central as a sign of credibility but as “a sign of weakness”. The macroeconomist said that, in order to try to win the elections, The government lost the opportunity to bring the exchange rate to a level that allows “to obtain the necessary dollars to grow, to sustain the disinflation process and in particular to leave the debt creditors calm down”.
While Salinas highlighted as positive the credibility of the entity that Santiago Bausili conducts, it also see a scenario with a “more active BCRA until October”, which can have negative consequences. “Obviously it was better than supply and demand regulates between private. It is not good to see the monetary authority bleed, so the elimination of the scheme becomes more likely“He warned.
The market doubts the sustainability of the post elections exchange scheme
Under this scenario, Federico MachadoEconomist of the Policies Observatory for the National Economy (Open), thinks that the Government and the BCRA will sustain the exchange scheme to the national elections of October 26, but that its useful life is far from having a solid guarantee for after that “Deadline”.
The specialist said that “it would have been a very strong disagreement if the Central Bank did not sell in the upper band,” but Project to see a BCRA selling reservations in almost all days until October, since you do not see private supply engines. “On the side of the financial account, everyone is waiting for the result of the elections and political signals are not good. And on the side of the current account, we are in the months of lower currency offer,” he explained.
Zack does not expect a significant flow of private supply either, rather the opposite. “The risk is that from here to the elections we have a change market where practically the only reference is the Central Bank. They are sustaining a lower exchange rate than the one that will remain after the elections and, therefore, it is as a self -fulfilling prophecy the ‘buy champion’ of Caputo; We are in the country of the world champions, where there are many champions who are buying“He deepened.
Warning reservations: How much fire do the BCRA have to intervene?
It is worth clarifying that, although the BCRA had not intervened so far on its own, the one that had put the tail in the official change market had been the treasure. In the week prior to Buenos Aires elections, their sales reached US $ 500 million.
For that drainage, recent debt payments were added for a nearby amount of S400 million, so the hard currency deposits receded Au $ 640 million. That is why, given this little firepower to intervene, the gaze became inn in the central, than if it has more resources.
Analysts’ estimates realize that liquid reserves are at approximately US $25,000 million, of which US $ 14,000 million disbursed by the International Monetary Fund could be used To contain the exchange pressure.
From here to October 26, the monetary authority It should sell approximately US $ 540 million per day to run out of those resources, something that looks very unlikely. Indeed, from the Province Bank they captured in a recent report that, from 2003 to date, only in two weeks were similar levels of weekly loss of reserves; In April 2018, during the first exchange rate suffered by the Government of Cambiemos, and in October 2019, prior to the restoration of the stocks and the elections that Alberto Fernández gave as winner.
However, the bulky debt maturities for the following months arouse serious doubts about the sustainability of this value of the dollar and this exchange rate policy.
Source: Ambito
