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How many bullets do the BCRA have left to reach the big harvest?

The challenges what’s wrong with it he central bank (BCRA) there are many ahead. With the closing of the SIRAit is anticipated a increase in demand for dollars on the part of the importers while, in parallel, exporter settlements are falling which press the gap of the CCL. At the same time, inflationary dynamics (in December the CPI reached 25.5%) generates an exchange appreciation that puts in check the crawling peg at 2% monthly. What will happen in the coming weeks?

In conversation with Ambitthe Economist Juan Telechea explained the state of the situation: “The first issue is having announced a crawling peg at 2% when inflation dJanuary and February will be around 25% and in March it will be high. You have a problem there because the dollar in real terms is getting cheaper very quickly. Added to the fact that in the coming months, with lower harvest liquidations, there will be a lot of pressure on the exchange rate.”

What firepower does the Central Bank have left? for Telechea there are not many alternatives: “One is to accelerate that crawling peg, bring it to levels similar to inflation 15-20% or hope to devalue again in March before the harvest. Measures could also be applied but these would go against President Javier MIlei’s narrative as it is regulate imports or raise interest rates to reduce the gap a little“Let’s now look at each of the challenges that remain for the monetary entity.

Exports and imports put pressure

According to a measurement by the consulting firm Romano Group the exporters their settlements are decreasing. Thus in the last 5 wheels the average was US$75 million daily, this total amount is made up of about US$30 million from the agricultural sector and the rest about US$45 million. “The decrease in volume is coincident with an increase in the gap (lower supply of the CCL dollar)“, they expressed.

At the same time, it was known this day that the Register of Commercial Debt for imports with foreign suppliers reached US$26,000 million. What happens is that the implementation of the new foreign currency access system for importers and the replacement of the SIRAS is generating an increase in demand for dollars. This week The first installment of foreign currency for importers will expire.

In this regard, in dialogue with Ambitthe Economist Claudio Caprarulo of Analytics He said: “Having revived the agreement with the IMF is good news, it helps to consolidate the position of the Central. In any case, Now that imports are going to begin to normalize and the exchange rate is going to appreciate, we have to see if that is enough. By case, The futures market for both February and March discounts a rate greater than 2%“.

And he anticipated what he believes could happen: “The key is going to be if the recession is going to operate to reduce the demand for imports in sufficient magnitude, and obviously if exports that are seasonally low become effective or not waiting for a new jump in the official dollar”.

Reservation accumulation and crawling peg at 2%: is it possible?

He central bank has accumulated in January purchases for US$1,734 million and since December 13, 2023 it totals US$4,596 million. Consulted by Ámbito, Andrés Reschinititle of F2 Financial Solutions He gave his opinion about whether this accumulation dynamic will continue and what puts it at risk.

“With the urgent need to accumulate reserves that the BCRA has it is likely that crawling at 2% does not end March. But it cannot be guaranteed that there will be no news beforehand. “Much will also depend on the inflation that is eating away at the exchange competitiveness achieved with the jump to $800,” said the analyst.

Exchange-monetary scheme: new devaluation?

A report of Ecolatina maintained that “the exchange-monetary scheme implemented by the Government is bold and involves no small risksboth due to seasonal issues and a delay in the impact of the implemented measures: Both the exceptional supply of foreign currency and its limited demand have short legs and they will hardly be able to sustain themselves during the summer without implementing new measures.

Thus, the same consulting firm predicted that in the coming weeks there will be a decreasing trend in the demand for money with a strongly negative real interest rate expectation (which has already begun to influence the gap), while the exchange rate appreciationreducing in the margin incentives exporters to liquidate foreign currencywhile the importers little by little they begin to demand foreign currency again in the exchange market.

“This dynamic would deteriorate the BCRA’s purchasing position during the summer while awaiting the arrival of the thick harvest. In fact, the market (REM-BCRA and USD futures on Matba-ROFEX) predicts that Since February, the crawling peg has been abandoned at 2% monthly“, they analyzed.

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