reserves decreased by $ 7.4 billion

The electoral roll of PASO continues to generate a deterioration (albeit limited) in international reserves managed by the Central Bank. As of August 12, the first round in which the market reacted to the triumph of Alberto Fernández, the plant had to sell to sell "clean" dollars in addition to those auctioned on behalf of the Treasury.

Exchange rate pressures, which forced the entity to redouble its efforts to keep the currency safe, and the deterioration of bonds that accelerated the cancellation of a million-dollar loan with a consortium of banks, mainly explain the drop of $ 7,418 million in reserves in eight financial days.

BCRA President Guido Sandleris and the new head of the Treasury, Hernán Lacunza, are determined that the dollar will not increase much more. The public defense of an exchange rate to stabilize (as the last two days) has its consequences in terms of loss of reserves.

"It makes no sense to stand in front of the train if the exchange rate is low, but as the exchange rate is higher than the equilibrium, it does not make sense to allow a irrational race, what is the purpose of the reserves, "said Lacunza on the radio. Miter

Sandleris also warned in the same direction at the conference that he pronounced on Tuesday. "There was a debate during the week on the use of the reserves of the Central Bank, and first of all I want to make it clear that international reserves are essentially used to moderate the volatility of the exchange rate. to ensure the stability of the financial system. As has been clearly demonstrated, international reserves will not be used to hold financial badet ratings away from their economic fundamentals."He remarked.

So it seems that the official strategy is to sell as few dollars as possible, but by "sacrificing" some of its money as part of the exchange truce.

Up to now, of the 7.4 billion US dollars that have fallen into reserves between the day before the OSP and the closing of this Tuesday, are explained as follows:

–The Central Bank had to sell counting and survey dollars for its own account, and thanks to scheduled auctions, it has already cleared a total of $ 709 million..

– The Treasury, also via the Centrale, which is the financial agent, continued its usual sales on the spot. It released a total of $ 356 million during the same period (average sales of $ 51 million per day).

-In addition, the economic portfolio had to repay $ 2,615 million of a repurchase agreement (Repo) which had been agreed with a group of international banks. This is due to the fact that this loan was secured by bonds which, when they fell so much in price, entailed immediate payment.

"The dynamics of reserves will have to be followed closely, because of the sharp fall of last week, which totals a little over 3 billion dollars Tuesday.We have already accumulated a decrease in international reserves slightly over 10% since Friday before STEP. In times of dollar shortage, this data needs to be monitored very closely. ", Warned Delphos Investment.

From the government, they say that the reserves "are for that", that is, to use them. Of course, the dollars in Argentina are a campaign problem. The candidate who garnered the highest number of votes within the OSP asked Mauricio Macri to "listen to the BCRA" in that the strategy of not drawing lots of bank is maintained.

In fact, Fernández criticized the official line run that Sandleris and Lacunza now publicly demonstrate. "It seems that they are determined to liquidate the reserves so that the dollar does not escape.And it always escapes.Remember that it cost 67 pesos.We have managed to bring it back to 57.58. We must make an effort but not at the price of closing the reservations every dayhe condemned.

"We must make an effort to keep the dollar moving, but not at this price," he added.

It is clear that neither Fernández nor the government should prevent the dollar from escaping. For the moment, the message that the popes of the economic team launched on Tuesday, added to the more fluid dialogue with the opposition forces, allowed the exchange rate to be in the desired "range" by the government: not higher last week.

In addition, the "A" communication 6754 transmitted by the Central limits the dollarization that can be engaged by the banks. In this case, in the total net foreign currency position that the entities could have, the central limited the cash of the financial entities to 5% of the calculable patrimonial liability (CPR).

This initiative aimed to limit leverage in the foreign exchange market through the use of derivatives by banks.

Did he reach with this combo? Perhaps, if the tranquility of the exchanges is maintained and that no surprises arise, the plant can take off from the accelerator and run to supply the market.

He had already done so last week while he was not selling a single dollar for two days. He had to redo it after the cimbronazo Monday on Wall Street with a country risk up 13%. But Sandleris and Alberto F agree on one point: we have to deal with reservations. Bondholders could begin to worry about a major drop in central coffers.

In the end, the Fund lent this money to guarantee to the bondholders that the repayment of their credits is badured. Of course, momentum can continue to change the focus of the debate. For now, the government hopes there will be a break that will not sacrifice so many reserves.

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