With the blue dollar at $ 182 and 13 election days away, the market is testing the firepower of the central bank

Two weeks before the elections, the foreign exchange market is still pending. The blue dollar is held in $ 182, the same level at which it has been evolving for 10 days. This places the gap against the wholesale dollar, which on the last Monday in August is trading at $ 97.72, by 86%.

The informal dollar is therefore twelve pesos more expensive than the savings dollar which reaches $ 170. This difference reactivates the purchases of those who can still access the official retail dollar. In July, 690,000 people, 56% more than the previous month, bought US $ 130 million This way.

Thus, pre-election dollarization continues to be strong, which puts pressure on the reserves of the Central Bank, today in 46,198 million US dollars after the impulse that the entry of the 4.334 million US dollars in special drawing rights (SDRs) provided by the IMF.

“Thanks to the record performance of agriculture, out of every US $ 100 purchased by the BCRA on the Single Foreign Exchange Market (MULC), US $ 35 has increased reserves so far in 2021 not counting SDR revenues,” details the consulting firm GMA.

Therefore, throughout this year, the Powerhouse has replenished its firepower and added US $ 2.6 billion to its coffers. But in addition, to discourage any kind of race before the elections, the exchange rate has been strengthened. “This question coupled with increasing restrictions in a context of financial repression They gave it room to keep the official dollar stabilized“, says GMA.

With these maneuvers, the usual trading tactic of stepping on the dollar before going to the polls was maintained. Figures from this consulting firm show that during the election years between 2005 and 2019, the BCRA sold, on average, US $ 263 million per month in the second half of the year.

“The greatest pressure was seen in August and October, which are months in which historically votes have been cast. However, this dynamic is exacerbated if only odd-numbered years with trading stocks are taken into account. in this case, the average monthly amount sold was 1.380 million US dollars between July and December “.

Market intervention

The main function of the powerhouse over the past month has been to hold the dollar as an anchor for inflation and to prevent financial dollars from escaping. In this task, a good chunk of the dollars he bought in the field’s record-selling market has gone.

“They drew US $ 340 million in July so that the cash with liquid (CCL) does not increase any more in August», Explains economist Andrés Borenstein.

This Monday, the cash with liquid in the segment operated by the Centrale is being traded at $ 170.9, while the MEP is sold to $ 170.6. At SENEBI, where private actors operate among themselves without the intervention of the monetary authority, the CCL achieves $ 176.

Fernando Marull, director of FMyA, points out that in August, “agriculture lowered the liquidation rate, although it remained at high levels: 3,000 million US dollars, 80% more than a year ago. “

“This month, the BCRA bought only US $ 200 million reserves because that freed up higher import payments, ”says Marull.

“In mid-August, the BCRA put limits on the CCL because it was already spending a lot of money to lower it: nearly 1.7 billion US dollars since October “.

The effect of the SDR on reserves is transitory since these dollars will be used to pay maturities until the end of the year with the IMF itself. Marull says they will have to use the BCRA’s net reserves in January and February (of $ 6,500 million), so “The urgency to reach an agreement with the IMF and the Paris Club begins to run” or pay them $ 3,000 million and $ 1,900 million, respectively.

QA