The central bank (BCRA) has accumulated sales of some 763 million dollars of its reserves so far in November to meet market needs, at a time when strict exchange controls apply.
“In one of the worst weeks of the year, the BCRA had net sales in the foreign exchange market of more than 500 million dollars,” recalled Roberto Geretto, from Fundcorp, and pointed out that “sooner rather than later this dynamic will increase the pressures on the dollar, where continuing to adjust the stocks each time shows more costs and fewer benefits”.
“The challenges for the Government on the exchange, inflation and financing front remain in force. The BCRA had another difficult week with sales for 524 million dollars while the government had a very moderate result in the exchange for dual titles with 61, 4% stake,” said consultancy Delphos Investment.
“Retail inflation in the Autonomous City of Buenos Aires (7% m/m) allows us to anticipate a monthly acceleration in the national data that will be released by the (statistics entity) INDEC next Tuesday,” he added. “It will be of vital importance for the financial program that the Government manages to accumulate International Reserves and continue reducing spending in real terms”estimated the consultancy Ecolatina.
“A fiscal consolidation process is essential for debt sustainability, since it tends to reduce financing needs and generate an improvement in market expectations, which would allow the Treasury to improve debt conditions in pesos in the short term. term and recover access to international financial markets in the medium term,” he added.
“The consolidation of (economic) stability would require as a first step the balance of the fiscal accounts and especially a positive daily balance for the central bank’s currency movements,” said VatNet Financial Research.
“This year we are going to have 100% inflation. If we do not achieve inflation reduction in the next semester, it is very difficult for us to have electoral chances. We are going to be presented with the challenge of being able to tell society what we lacked , what we did, what extraordinary moments we went through to not have the response capacity that we imagined,” said Nicolás Trotta, former Minister of Education.
“The government is trying to impose that an important group of companies freeze the price of 1,400 products for 120 days and that, in parallel, for the rest of the goods that make up the supply basket of these firms, the remarks run at a rate of 4.0% monthly”, recalled Fundación Mediterránea.
“In a context in which the exchange rate, wages and rates are being indexed at a rate of more than 6.0% per month, the inconsistency of the plan is striking. However, this is not an isolated event“, he estimated.
“For now, all are rumors (and some of them difficult to specify) regarding the sources that could contribute fresh dollars (to the BCRA) that prevent a crisis in the short term,” said the StoneX brokerage.
“We expect 2022 to close with inflation of 105%, the highest since 1991. Looking to 2023, we expect the loss of purchasing power of the currency to remain high, and triple-digit inflation will be repeated again. This would put Argentina as an almost unique case in the world of the 21st century, with inflation not only high and growing, but also persisting for almost two decades,” said Eugenio Marí, from Libertad y Progreso.
What can happen to the dollar
“The problem going forward that this administration maintains is that to maintain the attractiveness of peso instruments, it must compete with the nominal value imposed by inflation,” said the clearing and settlement agent Neix.
“If the perception that the official dollar will not move above inflation is maintained, given the scarcity of products that offer exchange rate coverage and the decrease in the gap in recent weeks, it is possible that the parallel exchange rates will begin to rise as hedge“, he estimated.
“The net reserves (of the BCRA), measured with the criteria of the IMF, are in the order of 4,800 million dollars. It is little, that is why the Government has urgency in terms of dollars and is prioritizing these urgency in instead of a real solution to the problem,” said economist Fausto Spotorno.
“To do this, you should establish a process that will eliminate the exchange rate, order the public accounts faster than what is being done and restructure the Central Bank, as a minimum. PBut the government itself understands that it does not have the time or the internal consensus necessary to go towards a stabilization scheme that includes these characteristics.“, he pointed.
Source: Ambito
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