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China and Basel close the door to Javier Milei and there is more BCRA debt with importers

China and Basel close the door to Javier Milei and there is more BCRA debt with importers

For the newly landed Martian, this would also mean something additional: that the pesos in circulation, at some point, will succumb to the simplest peso-dollar equation.

Switzerland and China asked for their dollars: the MEP route

Perhaps this will explain something that, according to two sources consulted, has begun to undermine the liquidity possibilities of the Argentine central bank. Said in Creole, They do not lend more dollars to the Central Bank – nor do they renew any swaps – because everyone suspects what he President He says openly whenever he can: that the Central Bank is going to set fire.

Let’s take the chinese swap. Let’s also add another swapin this case, from one of the main lines of liquidity provided by the Bank of Basel, which is the central bank of the world’s central banks.

china economy markets.jpg

In both examples, as this journalist, whose astonishment usually grows like the hair on his head, learned, the bureaucrats of the People’s Bank of China (BPC) and the Basel Bank for International Settlements (BIS) exchanged messages with the BCRA in recent weekswhose epicenter was the unsuspected intention of the Argentine entity to repave relations.

Strictly speaking, the word relationship comes from the Latin relatio, formed with the prefix re- (indicates reiteration), the root lat- (to carry something) and the suffix -tio (-ción = action and effect). All together it would be “action and effect of carrying something again”, in this case, dollars.

However, at least so far, none of this seems to be working. The reason? There are no dollars because the BCRA is supposed to close its doors soon. Who would lend dollars to a company that is going to cease to exist and that probably will not be able to pay its debt before closing its operations?

Hello, I’m Xi Jinping, I want my dollars… in installments

Let’s get to the two examples quickly. But there is more. At the end of June and July the US$4.8 billion agreed with China expire. And according to the experts consulted – who like to remain anonymous – there is no encouraging gesture regarding the granting of new financing for the BCRA.

At the same time, the experienced source maintains that, in any case, It will be necessary to take into account that China could request repayment of the swap in installments, not all together. However, even under that premise, they will request at least part payment.

Behind, and aside from the imprecations linked to communism and the various demonizations that the Argentine president usually expresses with respect to Chinathe aforementioned is hidden: For the BPC it does not make sense to maintain financing with an entity that is going to close.

caputo

Reuters

The same thing happened with the BIS. As Ámbito learned, The Bank of International Settlements, which is not Marxist, decided to suspend a liquidity line that kept it open to the BCRA.

He did it in the last few weeks. In fact, it was the BCRA that announced it in mid-April, when it reported that it had completed the total cancellation of the debt with the BIS for US$3,117 million.

In the statement released by the monetary authority, the Central Bank confirmed the “deactivation of the swap with the Bank of International Settlements.” He did so, as stated in the text, “within the framework of cleaning up the balance of the BCRA and the honesty of the economic variables.”

More debt with importers than net reserves

The table could be completed with a piece of information already recorded in these pages that adds more questions to the sequence of dollars. As a consequence of the staggered payment scheme for imports, Commercial debt continues to accumulate that already exceeds the netting of dollars in the BCRA reserves.

For example, according to official data during the month of April, The increase in the BCRA’s commercial debt explained 46.3% of the foreign currency purchased by the Central Bank. The same thing would have happened in May. That is, the postponement of payment terms for imports was not only the key factor for the Central Bank to accumulate reserves and transfer funds to the Treasury for the payment of debt with international organizations in the first four months. Strictly speaking, this debt would already far exceed the amount of dollars that the BCRA was able to accumulate in its reserves.

Milei Dollars Dollarization.jpg

Milei and the dollars.

Under the data reported by the BCRA, the main explanatory factor was the positive balance of US$12,099 million that the BCRA’s balance of assets showed. This number was quite far from the US$6,157 million trade surplus that INDEC reported for the same period.

Then, as assumed, this difference was explained by the commercial debt, which fundamentally includes imports that are made, but not paid.. Specifically, until the end of April, foreign purchases totaled about US$17,777 million, but the Central Bank only paid US$8,509 million, leaving a liability close to US$9,000 million for the future. Note that this figure was beginning to be higher than the BCRA’s net purchases and that, during May, it would be even higher.

From the CCL dollar to the MEP dollar: revisiting the exchange gap

This understands what the course of the dollar has been in recent days. Yesterday, financial dollars overheated: the CCL touched $1,300 and the gap exceeded 40%. After climbing to $160 in May, stock exchange rates also began June with significant increases. Political uncertainty and a lower-than-expected crop liquidation (another factor to take into account) continue to put pressure on the markets.

He dollar CCL It increased 3.5% ($43.98) yesterday to settle at $1,297.47. In this way, the gap with the official exchange rate rose to 44.3%. For its part, the MEP jumped 4.8% ($58.21) to $1,269.91 and the spread with the wholesaler stood at 41.6%, a record in four months.

That is, the “stock dollar” once again surpassed the blue, which closed at $1,235 for sale. As it was told, The end of the “carry trade”, uncertainty regarding the approval of the Bases Law and a lower-than-expected settlement for exports boosted alternative exchange rates. To this we must add the above: the dollars that both the BIS and the BPC demanded from the BCRA and that, little by little, the entity will cancel.

Source: Ambito

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