In the aftermath of the official easing of reserve targets with the IMF, the foreign exchange market remains stable. The blue dollar is trading at $377, the same price it closed at yesterday after a four-peso hike.
For its part, financial dollars hardly budge. MEP traded on Buenos Aires Stock Exchange drops 0.5%, $377.8while cash with liquidity, how businesses are dollarized, fell 0.9%, a $391.9. They are up 5.7% and 7% respectively so far in March.
For its part, the wholesale rate opened with a dime higher to $202.25, but by midday it stabilized at $202.15. This brings the gap to the blue dollar to 87%.
end of the intervention
Yesterday when the easing of reserve accumulation targets was officially presented with the Monetary Fund, it was also known that as part of the agreement the government had agreed to no longer use reserves to intervene in the parallel dollar market.
In the new agreement, the authorities undertake to “not use international reserves or issue short-term external debt instruments to intervene in parallel currency markets”.
“This is new, because while the market view was that the Treasury debt buyback was only meant to prop up Global dollar pars to contain financial dollars, it has never been recognized, not even by the Argentine government or by the organization itself,” said Portfolio Personal Inversiones (PPI).
And they clarify that in reality the government had already stopped intervening to prevent the escape of financial dollars. “The decline in reserves for “Other Transactions with the Public Administration” it went from $12 million a day through Feb. 23 to virtually zero since. Not surprisingly, the CCL rebounded from $366 to $394 (7.7%) between 02/28 and yesterday.”
“It seems reasonable that, in this dramatic context of reserve scarcity, the IMF has asked for the end of the parallel intervention in exchange for the modification of the target. As a corollary, we understand that in the end this does not change anything other than practically guaranteeing the disbursements between now and the change of government”, Ppi points out.
At the same time, they warn that “Argentina no longer has a reserve goal problem but a level. The stock is tiny ($4,000 million by the IMF metric and $1,600 million if DEGs are actually accounted for in the portfolio) and the flow plays against it like almost never before.”
Specifically, in the last 38 rounds the Central Bank has sold 1,774 million dollars, being one of the three worst brands for this period together with August 2022 (-US$1,832 million) and October 2020 (-US$2,743 million). So far, in March alone, the monetary authority has parted ways with $404 million.
“Unlike previous years, the drought (which could result in yet more production cuts) will prevent a significant jump in agriculture clearance from April, ensuring a scene of constant tension”, concludes PPI.
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Source: Clarin
