Although the Government celebrated last year’s achievement of the reserve accumulation target agreed with the Fund, The market’s concern for the Central Bank’s coffers is growing in a few months wheres Dollar debt maturities are high and add up to the demand of businesses and savers in the market, and in a context where there is the entry of foreign currency highly compromised, due to the impact of drought on the field.
Sources close to the Economy Ministry speculate that a new soybean dollar is likely.
“In August we had near negative net reserves. We ended the year with over $8,000 million and also expanded and activated the swap with China. We will start paying for imports in renminbi based on the agreement concluded between President Xi Jinping and President Fernández in the G7,” Economy Minister Sergio Massa said on Sunday in an interview published by the El Cohete a la Luna website.
While net reserves are no longer negative, there is a shared concern among both government officials and City economists: if these levels sufficient to maintain the business and meet the various paymentsat the beginning of the year when dollar income from the crop is estimated to be between This year 4,000 and 9,000 million dollars less than what was recorded in 2022.
In this way the current exchange account would go from having to surplus of US$ 4,000 million in 2022, to close with a deficit of US$ 5,000 million in 2023.
In line with last year’s target, the Argentine government has committed to the IMF to accumulate reserves of US$5.5 billion in the first quarter of 2023. It made payments last week, both to the international to creditors who entered into the debt exchange for some $2.3 billion.
Gross reserves closed at $43,104 million on Friday, down by BCRA, according to partial data reported by the BCRA. US$1.3 trillion compared to the close a week ago. Although debt maturities continue to be moderate compared to those expected from 2024 onwards, their relative weight is high in a context of lower dollar inflows.
“Without any other sector that could make up for this lack of supply, in addition to bringing forward to 2022 the adjustments that could have been made in 2023 and with the prospect that in the post-election period there could be a significant relative price adjustment, which would delay the settlement currency of this and other sectors, The BCRA’s ability to accumulate foreign currency looks extremely challenging.”said Pablo Repetto, of Aurum Valores.
Economist Fernando Baer, of Quantum Finanzas, warned: “Dealing with what is coming is complex, it can be a exchange between minimizing the loss of reserves and slowing down the level of activity”.
Among the alternatives to manage the lack of dollars, the idea of new differential exchange rates is gaining strength. However, Baer warned: “If the magnitude of the estimated export losses due to drought is substantiated, it is difficult to obtain compensation. Certainly We see increased volatility in exchange rates.”
On the market, they don’t believe that this year the Government will reach the objective proposed by the Fund and they are betting that it will appeal to an already known formula: more import stocks and new differential exchange rates for various export sectors. Although new contributions from international organizations that are able to support the level of reserves are not excluded, in a context of lower income their impact would be smaller.
Meanwhile, continuing to turn off the tap on importers could have greater consequences. Jorge Vasconcelos, of IERAL, said: “December’s imports would have already decreased by 13% year-on-year. There is no way to count on inputs and parts that allow the normal functioning of production activities. And January is giving very bad news about time. The value of the crop in 2023 could decrease by $9 billion.”
Source: Clarin
