In the five business days since March, the Central Bank has been buying 934 million dollars and from December 2023 it will total the acquisitions of 9,426 million dollars.
The Central thus takes advantage of the summer of exchange rates, in which money in liqui, the way in which businesses aredollarized, increased by 5%, while the MEP has moved just 0.2% since January 1st. AS, inflation accumulating close to 35% in the first two months appears not to affect alternative dollars. The blue dollar broke through the $1,000 mark and today it is worth less than three months ago.
The dollar’s decline so far this year is a consequence of the policies implemented Luis Caputo and Santiago Bausilithat they were removing excess pesos from the market amid an inflationary spiral that was liquefying incomes and pensions.
Today the gross reserves of the Central are at 28,049 million dollars. According to data from Aurum Valores, the Central Bank’s negative net reserves went from -11.5 billion dollars in December -5.7 billion dollars.
For Juan Manuel Telechea, economist at the Institute of Labor and Economy of the German Abdala Foundation, the factor that plays most in favor of the decline is exporters who establish 80% on the official market ($850) and the remaining 20% in cash with liquids ($1027). This means there is a lot of supply and the dollar collapses.”
“The market today is validating Milei’s economic program, considering it sustainable with decreasing inflation. The big problem is that all this confidence can be reversed overnight, as happened in 2018“Telechea detailed in Urbana Play.
The other problem is that with inflation rising, the dollar is steadily getting cheaper, which raises market expectations of a medium-term correction. But with the reduction of the exchange rate gap, which went from 160% to 16% in three monthsExpectations of a prompt correction in the official exchange rate are fading.
Because the dollar is falling
From IERAL, the economist Gustavo Reyes underlines that “at the beginning of last December the situation was dominated by a marked excess weight with its corresponding counterpart of dollar shortage and extremely weak monetary entity and deterioration of its balance sheet.
“The new management’s short-term goal seemed clear, if not so easy to achieve: reduce excess pesos and rebuild the Central Bank’s reserves. Data from late February shows that all variables improved substantially“Reyes said.
One of the numbers that IERAL points to as restoring confidence is that private dollar deposits have declined fell by 6.1% in December and grew by 7.6% in February.
“Given the increase in nominal demand for the monetary base (need to have more pesos for higher priced transactions), The BCRA also started buying dollars. In this way, the monetary entity’s reserves (gross and net) began to recover, the turmoil in the financial market was reduced, and private dollar deposits also began to increase,” concluded Reyes.
Source: Clarin
