In a scenario of exchange rate fragility and dollar scarcity, the Government will face the payment of 700 million dollars to the IMF this Thursday. This is an interest expiry that was scheduled for Monday 1 May and which, according to official sources, will finally take place in the next few hours. In that way, debt will add further pressure on reserves.
Several consultants warn this net reserves are already in negative territory. This is the available stock of currencies that the Fund monitors, not counting the swap with China and the Bank of Basel, the required reserves for dollar deposits and other liabilities of the Central Bank. And with scarce resources, there’s less wiggle room to hold the dollar down.
“Today net reserves are negative and will be even more so with the payment of interest to the IMF. This, if it persists and the trend of selling by the BCRA does not reverse, can cause more uncertainty and that the dollarisation process (which managed to calm down last week) is regaining momentum, together with a negative effect on the gap and on prices,” said Sebastián Menescaldi, deputy director of EcoGo.
After a series of measures, the dollar has calmed down in recent days. But the Central Bank continues to lose reserves. This Thursday he sold $125 million on the foreign exchange market and on the year Accumulates sales of US$3,171 million, according to Salvador Vitelli’s data. On the other hand, he has also set aside dollars for payments to the IMF, private bondholders and debt repurchases.
This situation, aggravated by the harsh drought and uncontrolled inflation, was the backdrop to the currency race that catapulted the blue close to $500 last week and accelerated the search for new funds. In the last few hours, the Ministry of Economy has confirmed that the United States will support an advance payment by the IMF. There are also negotiations with Brazil and China.
While Cristina Kirchner blames the Fund for the deterioration of the economy, the government has anticipated a sharp rate hike, the acceleration of the official dollar and the increase of rates up to 500%. All measures in line with the wishes of the body. Even so, there are worried faces in the official offices about the soy dollar’s meager results.
“There is not much alternative left If the soy dollar continues without generating a substantial foreign exchange inflow and an alternative source is not obtained (IMF disbursement, financing from Brazil, etc.) and the BCRA continues to sell foreign exchange, they will have to further tighten inventories (for example, imports) or lower the official exchange rate, the last alternative,” he said Pedro Martínez, economist at PxQ.
In this context, the exchange rate differential appears to be one of the main obstacles to the accumulation of foreign currency and the stabilization of the dollar. According to a report of the Capital Foundation, It averaged 65% in 2020, 82% in 2021 and 98% in 2022. Today, above 100% means soybeans don’t sell grains for $300 – increasingly closer to the wholesaler of $ 225 – and for importers to jump in.
“In 2022, you accumulated more than $5,000 million from the IMF’s net disbursement and got $10,000 million from the soybean dollar. Did you already realize that the accumulated exchange rate lag and the very large gap did not create the conditions for accumulate. And in 2023 you had a decline in reserves of 9,000 million dollars, the trend is zero,” he said Carlos Pérez, director of the Capital Foundation.
Meanwhile, the director of Analytica, Claudio Caprarulo, believes that the BCRA can maneuver with negative reservations “by slowing down some payments, accelerating disbursements by organizations”. But “if it continues to lose reserves, it ends up with a devaluation, the breaking point is the gap, if the parallels start to rise again you will be forced to devalue, pushed by the market”, he warned.
Source: Clarin
