How much reserve does the Central Bank have to hold for its dollar?

Since last week, the International Monetary Fund (IMF) has authorized the Central Bank (BCRA) to intervene without restrictions on the foreign exchange market, even when the value of the currency is in the non-intervention zone. But what firepower does the monetary entity headed by Guido Sandleris have?

According to consulting firm Econviews, the amount of dollars available to the plant to stop the volatility of the currency is $ 35,300 million. This is the level of BCRA's net reserves today, after deducting private sector reserve reserves in dollars and trading currencies with China in gross reserves.

Then, consultant Miguel Kiguel drew a hypothetical trajectory until the presidential elections. On the revenue side, the report looked at new IMF disbursements of $ 10,800 million in June and September. At the same time, he calculated that the auctions of dollars in circulation and the cancellation of principal and interest in dollars – as they appear in the financial program 2019 – will cost 12,000 million US dollars. 23.3 billion US dollars are usable, which is a "conservative" scenario, El Cronista reported.

The report predicts that if net reserves do not dampen the dollar's appetite, the government could loosen the IMF in the sale of Treasury dollars and swap funds with the Chinese Central Bank could be used transiently for contain a possible jump in the exchange rate.

The consultant concluded that the size of the arsenal at the disposal of the Central Bank was "significant", although it expects the market to "test" the strength of the new credit line. action of the monetary authority. And he said: "Reserves should not be used to defend a certain value of the nominal exchange rate, but simply to moderate exchange rate volatility".

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