He Central Bank will face a complex week in subject of reservations and could cut the buying streak of dollars which it maintains in the exchange market, with which it accumulates a positive balance of more than US$200 million so far this month. What factors influence and where does the market focus?
While waiting for concrete signs that will encourage the liberalization of the exchange market and a drop in the inflation rate, analysts are concerned about the level of negative reserves of the central bank (BCRA), in the midst of a workers’ strike that limits the income of foreign currency from exports.
“With the continuity of the dollar Blend (“Without the special dollar for exports (the new one in payment of two installments of imports) and the intervention that the BCRA can carry out to ‘sterilize pesos’ and without incorporating money laundering, net international reserves would continue to deteriorate in the remainder of the year to reach levels similar to those of a year ago, if the scenario does not change,” said the consulting firm EcoGo.
Oil workers strike
This Monday, the conflict continues and the ports are paralyzed. The oil workers have been on strike for six days to demand wages. There has been no progress in the negotiations in these days. Mandatory conciliation was also not implemented.
“A labor conflict cannot hinder the normal development of the sector that generates the largest amount of exports in the country,” stated Nicolás Pino, President of the Argentine Rural Society. This conflict affects the inflow of dollars to the Central Bank’s coffers at a seasonally complex time. In this context, the monetary authority could be forced to sell reserves to meet demand.
The positive balances for the monetary authority also occur despite the greater access to the official exchange market by importers, due to the new payment schedule established by the Government, which reduced the quotas by half.
Liquidation of agriculture and reserves
In the midst of this conflict, last Friday saw agricultural liquidations for US$117.9 million with purchases by the BCRA in the Free Exchange Market that reached US$3 million and a volume of wholesale currency in the official segment that again barely exceeded US$200 million.
“It is really worth highlighting two issues again: First, the good level of settlements in the agricultural sector, which on a daily average and despite the sharp drop in external prices remain above US$100 million. Second, the sustained drop in daily volumes traded in the official segment since the end of May, a movement that continues to accentuate at the beginning of August and that strengthens the role of the agro-industrial supply,” explained the Outlier report.
In this context, gross reserves closed last week at US$27,392 million, accumulating a weekly decline of almost US$180 million due to a interest payments to the IMF, which were largely offset by improvements in foreign currency reserves and the inflow of IDB funds.
This week we will once again be monitoring how this dynamic develops.
Source: Ambito
