He International Monetary Fund (IMF) approved this Wednesday a disbursement of US$7.5 billion for Argentina within the framework of the mission headed by the Minister of Economy, Sergio Massa, in Washington. In this framework, the great unknown of the market is How will the arrival of these dollars, which will take effect this Wednesday, impact the reserves of the Central Bank (BCRA).
In a press conference on Tuesday, Massa had given signals about approval of the revisions of the agreement with the IMF, which allows Argentina to access the disbursement and that were confirmed this Wednesday.
According to the director of Analytica, Ricardo Delgado, to Ambit, “Although it will not change the dollarization dynamics that the market has prior to october general electionthis news is very relevant in terms of expectations for the Government because it occurs, at such a delicate moment for the exchange marketand it will give it a certain air in that sense”.
This Tuesday, the Total Central Reserves were located in US$23,637 million and the banking regulator He has been buying dollars for six days in a rowIn other words, it was possible to obtain foreign currency in the official exchange market every day since the 22% devaluation of the peso was applied, after the primary elections.
What is the BCRA reserve dynamics like?
This is because a improvement in the exchange rate is encouraging the exports of all economic sectors, to a large extent and, also, to the fact that the Government has been restricting the imports strongly. However the drought impact in the sale of grains this year was devastating for the reserves and the BCRA It is in strong demand due to the need for intervention in the foreign exchange market to keep financial dollars at bay.
Within this framework, Massa’s intention was increase the disbursement amount What is the IMF going to do and take it, ideally, up to US$10,000 million. Although that did not finally happen, he did manage to add US$1.300 million on Tuesday that contributes the World Bank (WB) and the Inter-American Development Bank (IDB) to what comes from the Fund. And the market evaluates the impact of the arrival of these amounts.
“Without a doubt, improve reserve positionAlthough many point out that the net will remain in negative territory, it is favorable because cuts the negative position in half”, points out the director of MyR Consultores, Fabio Rodriguez. But he warns that the game played by these disbursements for market interventions and payments is limited because they are very shod with the schedule of maturities scheduled for September, October and November with the IMF.
Where will the IMF dollars go?
Likewise, it mentions that the loan from Qatar that was used to cancel the debt with the Fund and that of the Development Bank of Latin America (CAF) must be paid, while it does not rule out that part of the swap activated with China must also be paid .
On the other hand, Sebastian Menescaldi, director of EcoGo, maintains that one of the possibilities being considered is that “the IMF order the retention of a part of the funds committed for the payments of September and October” that Argentina must make to the organization. In short, with all the payments that must be made and, if this decision to withhold funds is made, at EcoGo they estimate that the BCRA will have some US$1.500 million “clean”.
Thus, he points out that, although “it is clear that the arrival of these funds is the saviour table who went looking for Massa in Washington and is a balm that it is going to bring some stability to the scenario, above all, after the uncertainty that was generated after the elections, it is not so much the contribution to reserves resulting”.
Impact on the dollar: what is coming
Consequently, Menescaldi believes that the payment helps to keep the financial leg as calm as possible and reduce the impact of paying for imports. In Delgado’s words, what he does is “give some margin to continue sustaining activity via imports and have a small cushion to intervene in the MEP dollar”. But he believes that the market situation will continue to be “very challenging.”
In short, as Rodríguez points out, it is undeniable that “in the very short term, the arrival of US$7.5 billion from the IMF and US$1.3 billion from the IDB and WB is positive” (US$8. 800 million in total). There is consensus in the market that it can help contain the spiralization of the different exchange ratesespecially financial ones, and inflation.
But, looking at the months that follow, analysts warn that these are not funds that allow a very strong intervention in the exchange rates because they are not intended for that purpose.
Now it is key, moving forward, keep in mind How will the BCRA purchase dynamics continue? in the official market because that will give it volume in liquid reserves and will guarantee it to have a strong own and liquid percentage that will allow intervention in the exchange market of parallel dollars and meet the demand of importers.