The purchase of dollars in the official exchange market (MULC) by the central bank(BCRA) is one of the many factors (not the only one) that influence the level of its international reserves and it is the most important as a signal accumulation and strengthening of the entity’s monetary and exchange rate policy. This Tuesday, Central scored 16 consecutive positive wheels in that square where he has bought US$792 million in total and, “since August 14, purchases exceed US$1,560 million“, according to data from the organization itself.
However, according to private estimates, the red of the year is US$1.8 billion and analysts warn that it is difficult to strengthen reserves. The buying streak of the organization led by Miguel Ángel Pesce happens in a context of runoff and after paying International Monetary Fund (IMF) US$790 million at the beginning of the month, after which, according to Consultancy 1816, the gross reserves “They drilled US$21,000 millionreaching minimums since 2006″.
Meanwhile, they estimate that the net losses are negative at US$10,800. This is also aggravated by the constant intervention in the official exchange market to keep the parallel (or legal free) dollarswhich are the MEP and Cash With Settlement (CCL).
The truth is that the BCRA, with only three working wheels missing for next Sunday’s electioncontinues with its buying balance and that means that, although the situation is very delicate in terms of reserves, it is somewhat attenuated by the aforementioned buying streak, which has not been stopped for a long time, but he did slow down his pace in the last few days.
What is behind the BCRA’s buying streak?
Another question that arises is what is the strategy of the Central to be able to pocket dollars during the last time? The main key is, according to the analysts consulted by Ambit, in a strict restriction on imports. The 1816 report points out: “The sustained decline in reserves It occurs despite the fact that the Central is a buyer in the MULCwhich is explained by a very hardened trap”.
However, despite the lack of dollars and although different sectors are demanding the approval of import licenses (SIRAs), as this media learned, Central data reflects that Argentina has “record levels of imports this year.”
The Purchases abroad accumulated US$64,000 million between January and October and marked the second best record in the last 5 years. Likewise, 2023 marked record so far in terms of imports of capital goods, parts and accessories, with a cumulative total of US$23.3 billion, compared to US$23.2 billion in 2022. In 2021, the item had totaled US$17.8 million, in 2019, it reached about US$16,100. million and the following year (with the pandemic), US$11.7 billion. He average of these four years is US$19,000 millionabove what was imported in 2019.
However, the economist Amilcar Collantepoints out that, with the volume operated in the MULC in recent times, one can sense that “the import trap is very strong and they are stepping on authorizations.”
Alejandro Giacoiaeconomist at Econviews, shares the view by pointing out that the clamp on the importing sector is the key to the accumulation of reservesand warns about the risk that this practice entails on economic activity by indicating that “it could lead companies to stop their production due to lack of inputs.”
Central Bank: the axes of the strategy
The differentiated exchange rate applied to the export sector (such as the agricultural dollar or the soybean dollar) is another key element. “On the supply side, the Fernet dollarthe soybean dollar or the exporter (70% export incentive through the official market and 30% through the CCL) I provide them with an extra offer in the official market, which also helped decompress the exchange gap”, point Colllante. And that has allowed The BCRA continues to be a buyer in the MULC.
In that same line it is expressed Martín Kalos, director of EPyCA Consultora, who explains to this medium that the accumulation of reserves is based on a combination of a brake on the outflow of dollars and an export incentive. The conjunction of a possible additional settlement for exports and a reduction in access to official dollar for import payments is, for him, “the main driver behind the accumulation of reserves in the current context“.
Regarding the first element, he points out that “spending on imports is limited, restricting the outflow of dollars” in that way. And, on the other hand, Kalos indicates that “the differentiated dollar measure results in an effective exchange rate of around $500, which favors several exporters, especially those who need to liquidate to cover various expenses during the harvest and the next campaign“.
For Giacoia, an essential element in the development of the export exchange rate is that, after the general elections, devaluation expectations for December decreased. He clarifies that “this does not mean that there will not be an increase in the exchange rate, but it will probably be less than initially anticipatedespecially if Massa wins.” But the truth is that, according to his vision, this decrease in the devaluation expectation made the scheme to liquidate exports, “with 70% at the official exchange rate and 30% at the CCLbe more attractive“. And he deduces, thus, that “This situation could be contributing to improving the offer in the market“.
Finally, Hernan Letcher, economist and director of CEPA, introduces a new axis by pointing out that policies that aim to control parallel exchange rates are also essential for the accumulation of reserves. This allowed us to have stable exchange rates at a level that he calls “Massa price“, that is, without surprises and around $900 in the blue and $880 in the financial ones. Although he warns that, “in the last days, “those purchases were already more moderate.”
Dollar: the return of the crawling peg
Likewise, it is worth remembering that all expectations are now focused on the middle of this week, since as reported Ambitit is expected that this Wednesday the crawling peg (daily microdevaluations), in principle, with an initial adjustment of 3% monthly.
The idea is that daily microdevaluations remain behind the rhythm of the interest rate in local currency and inflation, in order not to delay the liquidation of exports and make the dynamics of the exchange market even more difficult, especially considering a context of complex reservations.