Monetary mega-issue: BCRA has returned funds to the Treasury and has already spent $ 750,000 million to support the debt

While the Central Bank has chosen to close the faucet importers and turn on the dollar vacuum cleaner which allowed him, for example, to make this Wednesday the largest single-day currency purchase since 2016; also due turn on the machine to print pesos.

In the midst of the financial crisis, to “help” the Treasury it has already spent $ 750,000 million on bond purchases and another $ 377,000 million on interim advances to finance the expense.

In June alone, the monetary entity issued 85% of the pesos it sold to the Treasury during the year (not counting how much it spent on bonds).

A) Yes, in just one month, the agency issued more than $ 1 billion to deal with the tension generated in the local debt market.

In City point out that this broadcast is close to 30% of the monetary base and warn for a possible inflationary flash in the second part of the year, product of excess weight on the street.

On Friday, before the package of measures to adjust the exchange rate on Monday, the monetary authority transferred an additional $ 95,000 million to the Treasury as interim advances.

It was there Fourth time that Miguel Pesce has authorized this type of issue so far this month: therefore, 377 billion dollars have already been added for this concept.

In total, so far this year, transfers to the Treasury have risen to $ 435,051 million, a figure close to the initially agreed ceiling with the International Monetary Fund. Since the IMF finally decided to raise that amount to $ 475.8 billion, the government still has some air to continue using this route.

The Central has sucked up that surplus of pesos through passive subscriptions, but the operation also has a cost for the organization.

Delphos analysts explained: “To avoid inflationary escapes, the monetary authority sterilized approximately $ 900,000 million, bringing the stock of non-monetary liabilities to $ 6.5 trillion. This will involve issuing interest on these liabilities (quasi-fiscal deficit) starting next month close to $ 240,000 million per month. “

Bonds bailout

To this issue we must add the more than 750,000 million dollars that the Central used to buy inflation-linked bonds, in less than 21 days.

Although the monetary authority has implemented a special cycle since Tuesday to meet the demand for mutual funds and allow them to “get out” of their positions in this type of bond, spent more than $ 130 billion in two days.

The BCRA challenged a rule it had enacted in 2019, A6848, in which a special wheel, called REPF, has been enabled for active repo operations in which FCI managers can participate from 15:30 to 16:30

The operations offer a rate of 57.5% and the guarantees used will have an aforo (advance discount, intended as a guarantee) of 30%.

While there is no official data on movements through this “liquidity window” – a strategy that has been evaluated by sources from other organizations, such as the CNV -, market participants consulted by Clarione warned that mutual funds demand to exit their pesos positions by this means remained almost nil. Fund bailouts fell this week, but in the month they exceeded 323,000 million dollars.

pressure on inflation

In City warn that the Central Bank’s “bailout” strategy will have costs in the economy: greater pressure on inflation and the dollar.

On the one hand, the acceleration of the issue partly explains overheating of financial dollarswhose prices have been very late with the accumulated inflation this year and only in June “have tuned in”: with liquidity around $ 255, the increase in just one month is 21%; while the MEP dollar accumulates a jump of 20.5%.

“In June it issued (including Temporary Advances, Leliq and Pass interest and bond repurchases) 25% of the May monetary base (and data is missing for a week) exposing itself to a significant inflationary flash for the next few months, even more so in a context in which obstacles to imports could accelerate the process of price increases “, warned Pablo Repetto, of Aurum Valores.

For his part, Martín Polo de Cohen said: “Although it is difficult to predict the direct impact on inflation, the big problem is that the Treasury is spending morewhich in itself sets a minimum level for inflation in the coming months “.

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