What firepower must Sandleris have to stop a race?

He has not yet shown the cards and will surely be waiting at all to do it. The strategy of the Central Bank, which now rests on the unrestricted use of dollars, authorized unprecedented by the IMF, does not completely convince the market.

Although the effect has been dissuasive since the announcement of the measure a week and a half ago, the value of the wholesale note amounting to $ 46 and ending up bringing in 87 cents until yesterday , the real fight against the market has not started yet.

Will it be at the opening of markets on Friday when Cristina Kirchner's speech at the Book Fair will have been digested?

In the central part, they believe and repeat that the power of fire, and more now with the free will of the Fund, will be enough to put an end to the dollarizing pressures. But in the market, not everyone agrees.

On the one hand, and as such is the latest report of Eco Go (Marina Dal Poggetto consultant), the level of reserves is limited. Although they reach about $ 68 billion, they are offset by the required reserves for dollar deposits, the exchange with China, Basel loans and IMF dollars disbursed, but not yet used To pay the debt available reserves are around $ 20 billion. Is it still a relevant level?

In part, yes, but as Eco Go points out, it is significantly lower than Federico Sturzenegger's BCRA had before the end of 2018 (April 24 of last year).

At that time, the direction of the right hand of the former president had $ 35.8 billion for use in net form. That is to say that Guido Sandleris now has $ 16 billion less than Sturzenegger had to stop the dollar during the crucial election year.

Although the IMF also has an additional debt of 39 billion dollars, of which 14 billion have not yet been used to pay the debt.

According to the consultant, US $ 25 billion was used to finance the capital flight, and US $ 7.5 billion to finance the decommissioning of Lebacs' purchase portfolio investments) and only $ 7,000 million debt cancellation in dollars.

"In this direction, if political uncertainty continues to worsen and BCRA enters a reserve sales dynamic, BCRA's loss of perceived firepower relative to the low level of net initial reserves could lead to escalation. anticipations of devaluation and at a higher exchange pressure ", warns Eco Go.

BNP Paribas, one of the most pessimistic international entities facing the evolution of the Argentine peso, is in the same vein. They say that their main concern is that the government is underestimating the reaction of economic agents.

And they note that the available reserves of the plant would be linked to the level of dollarization that could be achieved, so they remain negative with the local currency.

"In addition, The burned reserves will quickly make the financial needs more difficult, which will have an impact on the credit risk and, consequently, on the expectations of depreciation ", reaffirms BNP Paribas..

But not everyone has the same level of uncertainty. According to Econviews, the consultant headed by Miguel Kiguel, is more optimistic with the arsenal available to the plant.

"We could consider the projected net reserves of about US $ 23,300 million as a reference amount and a conservative value for possible intervention on the foreign exchange market," he said. And he adds that if the ammunition was not enough, there are two bullets left.

-The first is that the IMF could ease the sale of Treasury dollars – currently, $ 60 million per day for a total of $ 9.6 billion – and add it to the pool of resources available for discretionary intervention.

-The second is that the funds of the Currency exchange with Chinese central bank could be used in a transitional way contain the change in the exchange rate.

Kiguel believes that, although the size of the arsenal available to the Central Bank is large, it is likely that the market will test the Central Bank's willingness to use international reserves in the next wheels.

"In our opinion, reserves should not be used to defend a certain exchange rate value nominal exchange volatility, but limited to moderate, "he suggests.

At the Central Bank, they are clearly optimistic about the future struggle for the dollar. And they may predict that the current photo is quite different from that of last year.

According to them, dollarization in 2018 represented about 12% of total badets in pesos. Taking into account the dollarization that has already taken place, an equivalent figure for the remainder of 2019 would represent about US $ 7000 million (something that can be financed). And also:

–Families have already dollarized their wealth (93% today compared to 83% at the beginning of 2018).

-The The transactional demand for pesos is at its minimum historical (but far from zero).

Banks and other financial sector institutions have restricted their holdings of dollars.

– Short-term peso badets (maturing in the calendar year) by non-residents increased to more than 20,000 million USD in 2018, compared to approximately 5,000 million USD this year.

The official thesis will be tested over the weeks. Everything will start to heat up in June with discolored applications. Or maybe sooner if, as we believe, the CFK book presentation officially triggers the candidacy of the former president.

The truth is that the dollar is plunged into electoral turmoil. That the political definitions be advanced will mark the beginning of the formal market test for the Sandleris artillery.

Discover the latest news in the digital economy, startups, fintech, business innovation and blockchain. CLICK HERE