Relief to the BCRA: for the first time since the new measures managed to purchase a minimum amount of dollars

The Central Bank succeeded yesterday to finish the day with a positive balance, having bought at around USD 15 million in the foreign exchange market. The figure is tiny, but at least it marked a change of trend after several consecutive weeks of sales. It is not clear, however, whether this improvement will continue in the next few days or it was a data point.

From the office of Miguel Pesce, owner of the institution, is still almost hour-to-hour evolution of exchange rate. The market is hanging on by a thread and the BCRA are few liquid reserves to intervene. That’s why, the greater concern in this instance is to begin to recover dollars and rebuild the confidence from that accumulation.

The Treasury made a strong placement of bonds in pesos adjusted to the official exchange rate. In this manner, would lower the need for financing via monetary emission, since there would be more voluntary funding in the markets

This slight recovery of reserves began to show for the first time the result of the measures taken in succession. In mid-September was defined a strong restriction on the sale of dollar-supportive. In addition, it is restricted partially the companies access to the official market for the payment of debts on the outside. Already in the last week it was announced a temporary lowering of withholdings to drive to the cerealeras to enter the forex from the last harvest.

One aspect that is still generating a lot of concern is that the gap exchange rate continues to increase. Yesterday I played the dollar informal, which touched the $ 155 and marked a new record. But the cash settlement fell slightly below the $ 152. In this way, the gap exchange rate continues to rise, and is already approaching 100%. The danger is that it continues on the increase, which would play against a settlement of exports and at the same time there would be greater impetus for imports (for access to a type of change much more convenient than “the street”).

The evolution of the foreign exchange market continues to be hour to an hour in the Central Bank. The ability to start to recover reserves will be critical to avoid devaluations, sudden stops. Therefore, the purchases of yesterday generated relieved, although the amount was very low and does not reach to mark a definite trend

In addition, the BCRA announced that it will maintain a policy of increased volatility for the dollar. But after the rise of 1% in the price of the currency on Friday was returned to the increments in the minimum dose in subsequent days. From the entity totally rule out the possibility of a devaluation, an abrupt official exchange rate. Clear that can avoid it will depend on the balance that can be achieved in the foreign exchange market, even if in the short term is to get to the base of a trap reloaded.

At the same time, since the Government are looking to give signs of a moderation in fiscal terms and monetary. On the one hand, it was defined that there will not be a IFE 4, as a new disbursement would represent a volume of $ 90.000 million. And in addition, the Treasury made a strong placement of bonds in pesos adjusted to the official exchange rate. In this manner, would lower the need for financing via monetary emission, since there would be more voluntary funding in the markets.

But will have to see if it is sufficient to avoid another crisis, as in year-to-date issuance reached $ 1.7 trillion of pesos. To the end of the year there will be the need of issuing another volume a millionaire by the deficit of the Treasury, which would further pressure the exchange rate and inflation.

I continued reading:

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