Soybean dollar 4 comes to an end: is the BCRA’s firepower enough to avoid a jump from the blue?

He soybean dollar 4 entered the final stretch. Five days before the end of the Agro-export Increase Program (PIE), the objective of allowing the central bank overcome the post-STEP stage and start the most difficult moment in a better situation: October 22. This new edition, which allowed 75% to be settled in the official dollar ($350) and 25% in the CCL dollar, managed to register better levels than the previous edition. But is it enough to cross the turbulence What’s coming?

Despite the difficulties, the central bank It concluded the week with a net purchasing balance of US$115 million due to its intervention in the exchange market. And thus, he managed to extend the buying streak to 29 consecutive wheels and it is the most extensive since the Government began.

However, analysts warn that the bond intervention prevents the central bank accumulate reserves which leaves it in a lean situation compared to October where two unavoidable factors come together: seasonality and electoral uncertainty that puts pressure on the demand for foreign currency. For the moment, the CCL dollar It is kept at bay mainly due to the soybean dollar and the MEP dollar under interventions. Although he bluehas already begun to show signs of bullish trend especially after the improvement in Income Tax revenues.

Along these lines, a recent report by Anker Latin America estimated that “practically all of the Dollars that the soybean dollar added 4 in reserves through the official market (a little more than US$500 million) were consumed in intervention in financial dollars.”

At the same time, he announced that “the access restriction to foreign currency through the MULC will be maintained in the coming weeks, given the need that the BCRA has to minimize loss of reserves in the official market to ensure the ability to intervene in financial dollars in the run-up to the elections.”

Soybean dollar 4: is it enough to contain the dollar?

The market is already beginning to anticipate what the next movements of the monetary authority will be. With the negative possibility that it will be extended, the channels through which the thread can be cut are not so many and the calm in parallel dollars will not be for long.

A recent report from Delphos Investmentpredicted that “calm in the MULC and in the financial dollars lasts once the Export Increase Program has ended, taking into account the trade imbalance. Furthermore, it adds the budget deficit extra caused by fiscal measures that imply a cost of around 0.8% of GDP, with the inflationary implications that this entails.”

While since Personal Investment Portfolio (PPI), They maintain that after the soybean dollar 4they hope that both the massive withdrawal of the offer of the MULC agriculture since it enters its period of low seasonality and there will be no incentives to liquidate and a greater intervention in finance.

“They will come together both dollarization of pre-election portfolios, which could be more abrupt than usual due to the thirds scenario, and the withdrawal of the “soy” dollar offer from the CCL, forcing the monetary authority to accelerate its pace of intervention. Meanwhile, in relation to the MULC, we consider that the BCRA sales They will return even with a private demand very repressed. Therefore, we see it as inevitable that the net intervention between both markets became systematically negative in the three weeks between 09/30 and the 10/22 elections. For this reason, the currencies that the Central Bank can capture in the remainder of the year become very relevant. “soybean” dollar.

The analyst Andrés Reschini indicated in dialogue with Ambit that this latest version of the soy dollar “has had as its main advantage for the government a decrease in the gap with the CCL which today remains around 110%. But it has not achieved significant increases in settled volumes through the MULC and continues to intervene in financial dollars, particularly the MEP. The net reserves are negative in around 5 billion and with the purchases they achieve in the MULC they cannot accumulate.”

“Soybeans have been worth $160,000 per ton since 09/07 and in this way, with the passage of time, it is losing attractiveness and it is expected that if sales continue like this, they will fall and tensions will return to the gap aggravated by proximity to the first presidential round.”

Dollar: the alternatives of the Central Bank

In relation to firepower of the Central Bank, Reschiin warned that “with negative reserves and tendency to deepen red is very limited and I would almost say that it is a political decision to what extent they are willing to affect the entity’s balance sheet and market pressure also plays a role. So, for now, soybean liquidations, the demand for portfolio dollarization and withdrawals of dollar deposits from the financial system are the main factors on which the short term exchange rate”.

The Economist Salvador Vitelliin dialogue with this medium did not rule out that there is a new soybean dollar in November with similar characteristics: “The Central Bank buys but fails to increase reserves, but it is an edition that is here to stay. There may be a second edition in November and if it happens, it will return in a similar modality where there is a percentage that the financier is liquidated.” At the same time he maintained that the definitions of Javier Milei The possibility of exchange rate unification also influences the farmer’s decision to liquidate.

In conclusion, for the market, the central bank has the following alternatives: tighten the belt with imports, enable the second tranche of the swap, intervene the MEP and reinforce the controls to operate dollar bag or blue (as previous experience already indicated).