The government runs after the dollar crisis and with few tools

The unwritten rule of the Argentine foreign exchange market is satisfied again.

In the midst of a currency crisis the most powerful and effective argument is to see the Central Bank buying dollars to strengthen reserves.

The key to the day focused on checking how much currency would come in due to the $300 Farm Dollar liquidation after an absence on Wednesday.

But, also, while waiting to see how the palace crisis generated by the abrupt departure of the President’s main advisers has been praised after having presented him with an emergency plan and warned him that, as expected, the agricultural dollar it would not arouse producers’ interest in liquidating soybeans.

Antonio Aracre was sacked and the minister of Sergio Massa strengthened but in a swamp where it is difficult to stand.

Alberto Fernández and Massa took a photo of the smiling Olivos’ residence in an attempt to convey serenity and harmony and it was released at the same time as the blue dollar touched $440 and market participants anxiously sought information on the dollar’s liquidation exporters.

Soy dollar settlement this Thursday was $71 million, an amount very scarce to think that the crisis is over but, at least, it has opened a window to decompress. Exporters reported that total deals reached $173 million. About $101 million is corn and wheat that doesn’t have the $300 dollar.

In gross numbers, the problem is soybean producers They pay you $105,000 a ton and they want $110,000 arguing that this would be his value per $300 farm dollar.

In his letter to President Aracre, he warned that the farm dollar would incentives were lacking favor the liquidation of producers who, moreover, fear the final impact of the drought.

The former consultant proposed that payment of export withholding taxes could be taken into account of income tax or that they could be calculated to generate some kind of credit for the industry.

A government so overwhelmed by the lack of dollars and the need to cash in order to meet its commitment to the IMF to reduce the fiscal deficit does not want you hear about adding more risk to the collection.

with water entering the boat in an intense way, The two defensive responses that arose from the meeting at the Quinta de Olivos (the president of the Central Bank, Miguel Pesce was also present) were manual: raise the reference interest rate and announce that would be extended to 60 daysUntil now, access to dollars at the official price was instantaneous for regulating services and goods abroad.

The postponement of the import payment is based on the logic that the central bank’s net reserves would be slightly higher than $1.2 billion and where the exchange rate gap between wholesaler and spot with liquidation is back to 100%, level that foreshadows a kind of additional definition.

On the side of the rate of time deposits and Leliqs, which has gone from 78% to 81% per annum, it implies betting on an interest rate of 6.75% per month which we will have to see how it competes with inflation in an attempt to prevent more pesos from going to consumption or the dollar.

For the Central Bank, raising the interest rate implies a double challenge.

On the one hand, for having set a new level that can be read as insufficient in the face of rising cost of living and unattractive for fixed-term savings at a delicate moment.

On the other, because the rate increase increases the amount of interest payable on cash bills (Leliqs) and the rest of the Central Bank’s liabilities which already exceed $12.5 trillion, a mountain of pesos deposited in the BCRA.

While Massa awaits credits from the World Bank and the BIS to prove that there are more dollars at stake, the game will be settled in the short term.

The official logic of choosing not to devalue at the time and betting on a defensive exchange rate strategy based on an increase in the official dollar, growing less than inflation and an exchange rate increasingly restrictive for the payment of imports and services abroad has entered an important stress zone.

For no state can afford to buy expensive dollars and sell them cheaply in an effort to stabilize prices and avoid inflationary jumps.

The problem now is that the regime has entered a new zone of turmoil, largely aided by the ruling party’s political crisis, and that for the seat-belt loosening manifesto to be fastened, more currencies than words will be needed.