The dripping of reserves does not stop. Despite an increasingly tight stock, the pressure on the official transfer market, to which fewer and fewer players have access, remains high and The Central Bank has already sold $366 million since the beginning of Februaryto meet the demand of this segment. So far in 2023, it has already offloaded $559 million, in its worst start in five years.
For twelve shifts in a row, Central went into the red for its intervention in the “single and free” foreign exchange market (MULC). It sold $59 million this Thursday, in a bleeding that has accelerated in recent weeks. On the market, they look closely at the dynamics of this market and assume that the government will have to come out with “containment measures” soon to avoid a bigger loss.
The sales take place in a market with a relatively low volume of transactions. Although this Thursday rebounded from what it saw the day before, volume in the cash market reached $354 million. One market participant assured: “The only supplier in that market is the Central Bank.”
Andres Reschini, from F2 Soluciones Financieras, said: “I think it is clear that the official RRII is not adhering and I estimate that by early March at the latest we need to have announcements of PIE-type incentive programmes.” However, this drought environment may limit the impact of a differential exchange rate for agriculture in terms of increased settlements.
“This year is more stimulating. Last year you had a delay in sales but there was stock. This year the coarse harvest will be significantly lower and we will see what happens with the prices,” added the specialist who also acknowledged. “In any case, the producer probably tries to take care of what he manages to harvest and even more in a context of political uncertainty due to the elections”.
The tension on the exchange rates is reflected not only in the draining of the coffers of the Central, but also in the acceleration of the rise in the official exchange rate and in greater intervention on parallel markets. On the stock market, the MEP dollar closed down 0.2% at $354.36 and cash with settlement closed at $371.54, up 1.5% from the previous day.
Lucas Yatche, of Liebre Capital, said: “In an environment where the supply of currencies is very low, with a significant drought, and in a month where the demand for money falls seasonally, not only are we seeing higher sales of dollars by the Central , but also a good acceleration of the creeping peg daily rate of devaluation), to bring it to an effective annual rate above 100% when a couple of weeks ago it did not exceed 80% per year”
The Central Bank accelerates the dollar’s daily rise and places it above expected inflation at a time when all market players expect prices to overheat in January and anticipate the data that INDEC will communicate next week. It will be worse than the government predicted.
All this takes place in the context of a discussion on the level of debt of the Treasury and the Central Bank. Economist Gustavo Ber said: ” to the mountain of weights added to the hemorrhage of reserves, insufficient to satisfy all short-term objectives, a “combo” too dangerous and therefore worries about possible financial tensions are growing in the face of a more accelerated search for cover”.
Source: Clarin
