The central bank failed to stop the drain on its reserves: The entity sold $88 million on the market on Thursday. Thus, in an exceptionally short week, due to the holidays this Friday, the agency liquidated $588 million and brought the annual red to $2,500 million.
The haemorrhage, which began in the second half of January, worsened in March, in a month in which the impact of the drought on agricultural incomes was felt strongly. So far this month, the agency has already sold $1.459 million in a combo in which few imports, energy needs and purchases from provinces and companies added up to meet financial commitments.
The fragility of the situation is high: in the 1816 consultancy it was estimated that in the Centerl Net reserves would not exceed US$1.5 billion. And, although the Government has announced international disbursements this week, postponed payment to the IMF for next week and carried out a “mandatory” debt swap for the public sector, the market believes that further measures will be needed to contain the Red.
Intense week for the economic team: seven days ago the Central Bank had to come out to validate a rate hike, on Monday the Ministry of the Economy was forced to deny rumors about the doubling of the exchange rate and came out with a government debt swap on Tuesday. which clearly seems aimed at obtaining financing in pesos and, at the same time, at monitoring the gap.
The exchange, which despite having already been implemented in the Official Gazette, still awaits new rules to be operational, had effects on the price of the securities. Dollar-denominated securities fell by more than 1% and country risk was close to 2,500 pointsin a brand he hasn’t seen since early last November.
The news also served to partially “deflate” financial prices: cash with liquidity, which had exceeded $400 at the beginning of the week, fell and closed at $389 on Thursday; while the MEP dollar closed just above 379 dollars. They have also managed to contain blue, which hit its nominal all-time high of $394 this week, and closed at $389 this Thursday.
A parallel dollar approaching 400 dollars has the government worried, even though the market warns that if inflation is taken into account, the ticket price would have to approach 600 dollars to reach a “crisis” value.
In the Municipality they analyze the impact of the measures taken this week and view them with suspicion. Economist Fernando Marull, of FyM Asociados said: “Today the BCRA has few alternatives to sustain this dynamic if it does not make decisions”.
For Marull, without additional measures, the inertia of reserves, with $23,000 less agricultural liquidations due to the impact of the drought, the Central Bank would lose $9.5 billion this year and reserves would go into the red at the end of 2023. The agency could try to stop the bleeding with something we’ve seen before in this administration: “lower energy payments, savings in tourism, inventories and higher import debt.”
But in the market they expect the government to try to reverse the balance on the dollar supply side. This is where the idea of differential exchange rates for new sectors looks like a short-term way out.
Charles Arterburn is a seasoned business journalist for News Rebeat, where he provides comprehensive coverage of the latest trends and developments in the world of finance and economics.