Being an odd year it is essential to see certain variables. Monitor daily the amount of reserves and how deposits evolve, both in dollars and in pesos. It should be noted that any deterioration in these could impact expectations and, in addition, feed back a negative effect that aggravates the economic situation, activity and prices. Clearly, today the stock of reserves is relevant and if the BCRA has to continue at this rate (intervening with US$100 million daily average).
As a first point, net reserves (discounting the Chinese swap, dollar deposit reserves and BIS loans and other international loans to gross international reserves) are around US$2,000 million (equivalent to 35% of monthly imports). ). If we look at its behavior, we see that, since last December, net reserves have fallen by US$5.4 billion.
The drain is explained by the intervention of the BCRA in the official exchange market in the amount of US$2.820 million and the debt payments of the restructured bonds (US$1.100 million). Going to March, we see that net sales were registered for US$1,737 million. In the accumulated of 2023, net sales reach US$2,820 million. As of March 29, the stock of international reserves decreased to US$36.85 billion. In other words, It is the lowest record since October 2022 and in the accumulated of 2023 the drop in gross reserves is US$7,748 million.
As a second point, and according to the BCRA, between March 8 and 27 some US$217 million left the banks. Deposits in dollars (private) went from US$16,409 million to US$16,197 million (we are talking about a drop of 1.3%). The daily average drop, in the last 4 business days reported, was in the order of US$45.7 million (US$183 million). The withdrawal rate increased with uncertainty and the exchange of sovereign bonds (in dollars) in the hands of the public sector (ANSES) for bonds in indexed pesos. Also, an election year.
For their part, the banks have dollars to respond to whoever wants to take them to a safe deposit box. In reserve requirements at the BCRA, there are US$12,304 million and the dollars available in cash from financial institutions total US$4,147 million (03/23). In short, there is practically 100% coverage. Since 2001, the regulatory framework has been modified to avoid a currency mismatch. The banking system only lends dollars to exporters and sectors that charge in dollars.
As a third point, today there are 9.6 trillion pesos (or approximately US$25.070 million at the price of cash with liquidation) in time deposits from the private sector. If a significant portion were to try to hedge into hard currency, it could widen the currency gap considerably.
In the last month, we had a 14.4% increase in time deposits. For their part, UVA fixed terms fell 2.2%, also in the last month. In the last 12 months, traditional deposits rose above estimated inflation (134%).
The UVA fixed terms they did so at 37% year-on-year. In itself, they fell 32.4% in real terms. Entities do not want to assume indexed liabilities. Of all time deposits in pesos, 88% are placed between 30 and 59 days. Pre-pandemic, this percentage was 69%. This indicates that they are placed in the very short term and concentrated in the hands of wholesale investors (80% of the total). If savers chose not to renew 10% of time deposits and went to the free dollar, it would imply an estimated demand of US$2.5 billion. Something that, naturally, would put a lot of pressure on the exchange rate gap. It is an essential variable to monitor.
In summary, it will be essential that expectations are not misaligned so that the crisis does not spiral into a year like this. These three variables to observe will allow us to see how the macro evolves for December 2023.
Federico Pablo Vacalebre is a professor at the CEMA University
Source: Ambito
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