In a rudimentary family economy it would be nonsense, but if there is access to bank credit, overdraft and the pedaling of the credit card, it is a possibility within reach. But also a latent danger in the hands of those who do not make austerity a virtue and prudence a way of exercising it. That is what happens with the international reserves of the Central Bank, which exceed US$33,000 million but, deducting debts and receipts, are already in negative figures..
In red. The count of the dollars available to the BCRA was always on the scene of the discussion. On the one hand, those who adhere to interventionist economic policies need and struggle to have “fire power” which simply translates into more availability of liquid reserves. The paradox is that said policies just use, but do not accumulate, the reserves that would serve to make greater exchange control feasible..
Esteban Domecqpresident of the consultancy Invecqpoints out as a failure of the economic policy that after two years of record exports from the agricultural complex (in which they far exceeded the average level of the previous decade), the Central Bank was unable to accumulate the necessary reserves to be able to face eventualities, such as the drought that two consecutive years of La Niña impact warned for the 2023 campaign. The balance has not yet been closed, but what was believed to be a ceiling in the impact (US$20,000 million) in the fall in the export balance became the floor of the worst campaign in 15 years. In April, according to official data from INDEC, exports fell 29% compared to the same month in 2022 and there was a trade deficit of US$126 million..
The Economist Fernando Marull note that, with the closing of Friday, May 19, de the US$33,155 million registered as total reserves of the Central Bank, after deducting the liabilities, US$1,448 million remain, but negative. Subtracting from this gold holdings, deposits in the Basel bank guarantee scheme, and SDRs (the IMF’s unit of account) we arrive at -US$7,066 million.
signs. Salvador VitelliHead of Research at roman group, warns that these figures express, above all, a clear inconsistency in the exchange rate policy of the BCRA. “It is only ‘sustainable’ to have negative net reserves because the money is fungible, that is, the money is used for other purposes. How much more they can continue to increase in magnitude will depend on whether the money can continue to be used for another purpose”, he points out.
In his opinion, the origin of the funds with which the Central Bank intervenes in the exchange market is not clear either, but he recalls that there are not a few economists who have already called attention to the prudence to take care of the level of deposits in dollars. “Today the reserve requirements are at US$11,370 million on some US$15,000 of the total private deposits to which must be added what the banks have hoarded (US$3,000 million).. Only 20% of the deposits are lent, so there is no concern about the destination of these assets, but who cares for them”, he points out. And he recalls that the “noise” began on March 21 of this year, when the public debt swap of the Sustainability Guarantee Fund and that ended up falling in some US$ 1,000 million (-6% of private deposits). The truth is that during April private deposits (it is assumed that public entities have other foundations for their administration) fell and then in May they stabilized.
non-traditional outlets. Clearly, this situation is not sustainable over time. It is the reason why Sergio Massa made his financial tours a reason of State. Having encountered the realism of Brazil and China for the use of currency swaps (no creditor is interested in financing the break with international organizations that could facilitate commercial agreements of this type), it was left to explore the advance of funds from the IMF . They would not be dollars but SDRs that are difficult to monetize to continue disciplining the exchange market that insists on coming clean. One purpose would be to avoid temporary mismatches, but they would always be for use in the current account with the IMF.
While this is happening, the tussle in the financial market continues. The two levers that the Government has to control something are red hot. On the one hand, the use of the bond market to prevent “financial” dollars (MEP and CCL) from escaping and thus send a signal that does not feed back into inflation. For the consultant eco go The jump (+7% in a single day) that brought the gap back to 105%-110% could be explained by an express request from the IMF or a gesture of goodwill to achieve the much-sought-after advance of funds. “Net international reserves are negative today at US$1.670 million and reflect the lowest value recorded since the arrival of the current government. In the week he managed to buy more than US$300 million, of which US$80 million were for higher settlements and the remaining part was due to a lower net purchase of the rest of the demand for foreign currency in the market”, he expressed in his latest weekly report.
For Vitelli, the message to the market with the temporary non-intervention is that it puts another floor on the financial dollar and then it will surely try to intervene. “The BCRA has the bad practice of spending the dollars it does not have on intervention and as we saw last week, when it withdraws, everything returns to its previous state. The question is why it was withdrawn from the market to understand if it is a new policy or if it is just a pause in the previous one”he concludes.
The other lever is that of internal financing. Invecq points out as an element that changed the scenario the growth of the indexation of internal debt placements: in April only 6% of the instruments placed were not indexed and in May it was accentuated with only 3.1% that were not indexed and placing a title for investment funds with an effective annual rate of 139%, almost 31 points more than the rates paid on average in April. “The intervention was not free: despite the fact that the Central Bank bought US$326 million in the exchange market in the last 10 rounds, gross reserves fell by US$876 million”, Mark in your last report.
This labyrinth is completed with a paradox that indicates Mark Buscaglia. With the obsession of looking for dollars, the race against time already has a big loser: the peso. The demand for money has been collapsing since 2019. Measured as a percentage of GDP, it went from 6.8% at the beginning of 2020 to 4% last April. Argentina’s inflationary memory makes the flight from the peso the other side of the coin of the reign of the dollar. A vicious circle that hopes to become virtuous.
