After closing April with a negative balance Due to its interventions on the foreign exchange market, the Central Bank again sold dollars in the first round of May and confirmed that the dynamics of reserves It cannot break out of its critical state.

There are many taps through which the BCRA dollars come out: the dollars sold on the financial market since last Tuesday are added to the demand by importers to stop the surge in the exchange rate. The deadlines that the organization chaired by Miguel Pesce has to face are also accumulating: last Friday the gross reserves recorded a drop of US$800 million and accumulate a decline of US$3.8 billion this year.

This Tuesday the dynamics were not much different: reserves fell again by 218 million US dollars and totaled 35,078 million US dollars. This is the lowest level since 2016., when they had reached $32.4 billion in October of that year. However, since then, reserves have bottomed out and started to recover, and the market now believes the current dynamics are hard to reverse.

While Minister Sergio Massa accelerates negotiations to have “fresh dollars”, en the market does not take its eyes off the calculations on the level of net reserves, which can be used to estimate what path the dollar has ahead.

“The key question becomes how to mitigate the loss of reserves, both due to higher supply and lower demand,” warned PPI analysts, who stressed that the “soybean dollar” is unattractive for agricultural producers to accelerate the offer. “Both this soy/agro dollar deal and foreign exchange purchases are the lowest of the three regimes, although target production is also the lowest of the three periods,” they warned.

Even attempts to control demand are not producing the expected results and the strategies involve, in some way, the sacrifice of greater reserves. According to market calculations, Central sold nearly $136 million last week, adding another $100 that it would allocate this Tuesday to buy bonds and thus curb the prices of both the MEP dollar and Cash with liquidation.

Santiago Manoukian, economist at Ecolatina, He warned that since last Friday the net reserves are negative: “With the payment made to the IMF, it has already reached the negative 50 million dollars. The central bank’s firepower is greatly impaired.”

In this sense, Delphos analysts stated: “This keeps expectations high for a decent jump in the exchange rate, which according to the futures market would occur with a high probability in August. We maintain our forecast of a decline in gross reserves between $8,000 and $9,000 million this year.”