When does the draw of the Central Bank's dollars begin?

The dollar has risen at the rate of one peso a week. Friday, it closed above 46 pesos on the main banks of the city and the week before at 45, at most. The tranquility of the exchange of June and the first part of July seems difficult to restore this month. Working days for the August 11 elections can be counted on the fingers of one hand and increase the pressure exerted by the exchange rate. Investors started asking the million dollar question: When will the reserves begin to be drawn again?

Central Bank interventions in the futures markets and the rise in the interest rate in pesos do not seem sufficient to contain the daily increase in the currency. In the market, they make sure there is a high probability that the power station will intervene again this week with the direct sale of dollars. It would look like prevent quotation exchange rate break the record by almost 47 pesos reached the end of April.

Monetary authorities are reluctant to move ahead with the dollar. This supplement was asking if they planned to offer foreign currency in the coming days. The answer was cbadette: "The trading strategy is not advanced." The reservations available to intervene in the forex market would be located around the 6000 million dollars. The Fund would not approve the sacrifice of foreign currencies in excess of this amount (equivalent to 10% of reserves). This would not allow daily sales of more than 250 million. of dollars. These are the numbers that have advanced to Treasury two of the consultants with the biggest call of the city.

British Columbia faces a significant risk. The ability to sell currencies to contain the exchange rate jump has turned into a miracle solution. The use of this instrument at the right time can curb the speculation of some investors and even alter devaluation expectations. But intervening with bad timing may be the drop that overflows the glbad and again causes panic investors.

The bottom of April 2018 lights the red lights. The plant pulled $ 4731 million to try to keep the price of the dollar around 20 pesos. The result was counterproductive: the plant's inability reaffirmed the market's decision to dollarize. In June of this year, the councils put the exchange rate at 28 pesos and in September at 38. Repeating this experience this year would be traumatic. The price adjustment – beyond what is happening in the short term – seems impossible to contain.

Mathematics has a powerful tool for demonstrations: the reduction to the absurd. The technique to prove an argument is to deny it. It is verified by the contradictions generated by the maintenance of this negation that the argument is true. The future of the dollar can be thought of with this same logic. You can start by denying instability. The badumption would be that the dollar will not be devalued. But it becomes absurd when the imbalances of the macro are reviewed.

The list of elements that contradict the possibilities of exchange stability is vast. The short-term debt of the Central Bank is one of the main stressors. The Leliqs were at the center of market consultants' debates last week. None of these countries rated them as viable with these 60% interest rates. The consensus indicates that these liabilities will eventually become liquefied with the rise in the exchange rate, which was Lebac 's adjustment mechanism of last year.