The incessant drain of foreign currency from the Central Bank continues and the situation of net reserves is critical. The monetary entity began the week by extending the selling streak by registering this Monday a negative balance of US$95 million for their intervention in the official exchange market.
The bleeding of currencies occurs in a scenario of less liquidation of agriculture due to the impact of the drought and the advancement of sales that implied the soybean dollar 2. In this regard, Salvador Vitelli, a specialist in finance and agribusiness, indicated that Agro-exporters have entered US$901 million so far in March, which implies a 67% drop compared to the same period in 2022.
The specialist specified that “the daily settlement average amounts to US$53 million, which means a decrease of 40% versus the historical average and a drop of 63% versus 2022.”
Given this scenario and to avoid a devaluation, analysts are waiting for the Government to announce measures to stop the bleeding of currencies and believe that there will be greater restrictions on imports, in addition to new differential exchange rates such as the Malbec dollar for the regional economies. Otherwise, they warn that in April the stock of net reserves could be null or slightly negative.
Dollars: selling streak extends
The BCRA started the last week of the month with a net selling balance of US$95 million to supply demand in the single free exchange market (MULC), thus extending a selling streak that has already been going on for 15 rounds in a row.
Some market operators highlighted that, during the day, the BCRA had to supply the demand for dollars from financial entities -for around US$54.4 million- to meet the cash needs of the entities, and they suggested that it was due to a greater outflow of deposits after the exchange of dollar bonds of public bodies announced last week.
This Monday, the BCRA registered a negative balance of US$95 million due to its intervention in the exchange market
However, economic team supplies pointed out that “The withdrawal of dollars is below normal, nothing unusual was observed with the demand” and they explained that “there is always a demand for dollar bills and especially when the salary payment date approaches.”
In this sense, the market admits that the statements of former president Mauricio Macri last night in an interview stating that bank deposits in dollars are being used to cover demand could generate some instability. The former president asserted: “Getting out of the stocks is going to be very expensive and the truth is that there are no more dollars in the Central Bankl, we are entering negative dollars. That means using people’s dollar deposits,” she warned.
In this regard, the financial analyst Christian Butler He called Macri’s sayings “irresponsible”. “The irresponsible Macri said last night in an interview that the BCRA is using the dollars from the deposits. It is irresponsible to go out with that message. If you really have any doubts about it, file a criminal complaint, go to court to find out.” can corroborate if it is true or not. If it does not go to Justice, it is for the purpose of simply trying to create instability in the financial system,” Buteler questioned.
The market, waiting for measures
The BCRA sum in March net sales of about US$1,562 million, and so far in 2023 the sales balance amounts to around US$2,644 million, and it is the largest since the exit of Convertibility.
“This sets the worst start to the year for the BCRA since at least 2003. The difficulty is no longer how to generate the dollars but how to retain them. As a result, the net international reserves (according to the IMF methodology) are currently close to US$1.2 billion, falling almost US$6,500 million so far in 2023. Although the easing to meet the first-quarter accumulation goal with the IMF (-US$3,000 million) that was revealed by Economy increases the probability of reaching it is hardly enough: even contemplating the close to US$1.7 billion that could be added when the next IMF disbursement arrives. The Government would still need to add some 1,800 million in the wheels that remain for the month,” emphasized the consultant Ecolatina.
Along these lines, the economist Fernando Marull estimated this Monday that the liquid reserves of the BCRA (without SDRs or gold) are in negative territory (-u$s5,000 million).
Calves also warned that “It is a panorama that worries the BCRA a lot, losing this level of foreign currency. Not only the failed wheat harvest complicated the scenario, but also the early corn harvest is completely wrecked. and there won’t be too many dollars coming in that way.”
The bleeding of currencies became more acute in March due to the impact of the drought that will cause a fall of some US$20,000 million
“And the coarse harvest of soybeans and corn is going to be considerably reduced by the drought, which is going to complicate the coffers of the monetary entity, which already accumulates between US$10,000 and US$12,000 million in debt with importers,” added.
Of the same diagnosis, the sarandi consultant stated that “the situation of the reserves is at a critical point that is difficult to resolve: the pace of imports cannot be reduced much more due to its impact on the level of productive activity. Nor does it seem feasible to stimulate in the short term the quantities of new exports sectors through tax reductions”.
“Economy hastened the entry of financial dollars linked to credits with multilaterals, activated a new tranche of the swap with China and managed to recalibrate the reserve accumulation requirement. However, unrestricted reserves are already below US$5 billion, using the IMF methodology. It is a drop of almost 40% in three months, and the trend does not seem to be reversed for the second, which was always the golden quarter.”he warned.
For its part, a report GMA Capital He remarked that the deterioration of the exchange dynamics “is taking place in the first quarter of the year, when the drama of the drought has not yet been fully felt.” And he delimited: “to take dimension, considering the average of 2003-2021, in the first quarter 20% of the total for the year is usually liquidated, a proportion that rises to 33% towards the second quarter.”
Given that due to the drought, a lower inflow of foreign currency that would reach US$20,000 million is expected, at GMA they speculate that “given the refusal to discreetly adjust the exchange rate, the only possible way to close the equation is with greater control over imports, a fact that will directly impact the level of activity”.
The consultant FMyA He also warned that “the BCRA is running out of reserves.” That is why he considered that “it is very likely that he will stop the bleeding with measures on the supply side.”
In the market they hope that there will be more restrictions on imports to stop the drain on reserves
“There are 3 weeks left for the hit soybean harvest to start, and that should bring some calm if the Government increases the offer with the soybean dollar 3. In addition, it should launch some alchemy to increase reserves like the Services Dollar or with Mining,” stressed.
On the demand side, the consultancy maintained that “today the launch of new measures seems unlikely because they have already given everything, except that the stocks on imports (SIRA) tighten more or the BCRA forces companies to resort to more debt with the outside”.
the analyst Gustavo Ber agreed that “in the face of the resistance to accelerating the crawling peg”, even in the midst of a currency drain that does not stop, which accentuates concerns about the scarce net reserves, imminent new measures on the supply and demand of currencies are discounted ” .
In tune, the analysts of Facimex Values they highlighted that “Given this scenario, and given the low level of net reserves, we expect the economic team to prioritize adjusting quantities (deepening restrictions on imports and/or postponing commercial debt payments) instead of prices (correction of the official exchange rate ).
