Dollars flying from the central bank | The fall of …

The devaluation of China and the proximity of local elections have made the dollar Occupy the spotlight last week. But there was one variable that, at another time, would have focused the curiosity of the main market badysts: international reserves. Central Bank authorities absorbed nearly half of the $ 5,400 million of the loan disbursed in mid-July. In simple words: the drop in reserves was nearly $ 2400 million in three weeks.

Economists have badumed that the center would use foreign currency last week to intervene (and try to contain) the exchange rate. The official bet was not to sell currencies to compensate dollarization of the market. The strategy was to take advantage of future dollar contracts: makes equivalent transactions for more than $ 100 million a day. Interest rate it was the other instrument of containment: it exceeded 63% for the first time since the end of June.

The decision not to sacrifice dollars to control the exchange rate did not prevent reserves from falling at an accelerated rate. The downside has been over $ 2,000 million in the last 15 days. The trend was reinforced last week. High frequency statistics from the monetary authority specify a loss of $ 1,200 million over the last five days and $ 1,700 million over the last ten days.

Last Monday was one of the days that recorded the biggest drop: 520 million. The main explanation was the devaluation of China's currency. The central treasures are equivalent to 20 billion dollars in yuan. Price differences have a significant impact on reserves. The devaluation of nearly 2% of the yuan caused a fall of nearly 400 million dollars. Tuesday, there was another decline of 450 million. The operators felt that this was due to the payment of debts with international creditors.

The pace of falling central currencies seems untenable. Net reserves do not exceed $ 18 billion and in the average of the last three weeks, about 150 million people were lost per day. These figures light up the alarms of the consultants. The net reserves of the monetary authority – if the drop rate of the last weeks is forecast – would be exhausted in four months (120 days). The decision to intervene on the foreign exchange market could accelerate the effect.

The level of reserves is difficult to estimate at the end of this year. The result can be modified by many variables and will largely depend on the evolution of macroeconomic tensions. The important point is the situation of structural weakness in which the plant remains for the next few years. The entity has no real savings (the reserves are mainly debts with international creditors) and the zero monetary policy has caused a short-term debt increasingly difficult to disarm.

The balance sheet of the management of the agency does not show favorable points. He could not save. He could not reduce inflation. It has failed to stimulate the growth of the internal market. He could not maintain his credibility. The next central authorities will face a big challenge: recover these badets from the entity. Market economists say the task will be titanic: rebuilding the institution will take years.