Monday , November 30 2020

Unaffected by BCRA intervention, the dollar accelerates the downward trend.

Source: Archive

The market discusses Cavallo's thesis on the dangers of band amplitude before possible jumps.

The price of


It fell more than 1% yesterday and weakened in the local market. He showed that he could not keep it even in the purchase of civil servants (which did not plan but tended to restrict the movement).

The ticket only slipped 37 cents and 46 cents at a wholesale price of $ 37 (average $ 37.03) and a retail price of $ 38.02 ($ 38.02). Previous. The market again provided an imbalance in terms of supply. Despite efforts by the central bank (BCRA) to adjust demand through purchase interventions. Yesterday he bought another $ 50 million a month and $ 390 million.

This expanded the distance between the "floor" ($ 37,715 a day or $ 37,787 a day) and the "ceiling" ($ 48,807 / 48,90) The intervention considered in the exchange plan since October is a niche that some analysts begin to see as dangerous if the market suddenly corrects the trend for any reason,

Discussions on the risks of maintaining this plan without major adaptation were established by former minister Domingo Cavallo. A few days ago, in an article posted on his blog, he described it as "the greatest weakness of the current currency and foreign exchange policy" as "a large range of nonintervention zones."

Unexpected internal and external events, which may frighten depositors with the peso, could result in devaluation of more than 30% in a few days, and many people who have made a deposit with the peso have decided to go to the dollar. Also, restrictions on market intervention have been removed.

In recent months (and partly, Leliq received subsidies through BCRA), recent banks have paid more attractive interest rates and dollar feeling (no rise path after 120% in 10 months), about $ 250,000,000 We have set up a new fixed deadline from January to now. The majority were renewed due to the stabilization or decline of the dollar as a short-term contract (30 days). Monetary authorities in February are trying to review by offering incentives through incentives in companies Long-term placements

The downward trend of the dollar in the local market is partly due to a better tendency for the risk to become clear once again in the market. The new global weakness of the dollar (when the new US interest rate hike is delayed), and the boost that the Bolsonaro effect gives to the Brazilian real.

But on the second day, BCRA's chairman, Guido Sandleris, did not meet in Davos (Switzerland) after saying, "The company implied to take cautious action." Therefore, it is necessary to increase the self-imposed limit of intervention by $ 50 million to create conditions to accelerate the decline in interest rates.

Since that definition, the wholesale dollar has dropped from $ 37.56 to $ 37.03 in just two days in the negotiating market with more than $ 152 million in cash.

In parallel with the injection of pesos for intervention (about $ 2.73 billion in the last 48 hours), Leliq was partially renewed to another $ 225 million, down from 56,80 per year to 56,60%. Reference interest rate.

Incidence of ratio

"The peso rally depends on local market conditions that are in many ways related to real and good global climate forces, but which are undoubtedly imbalanced in terms of supply (import and hold due to a sharp drop in US demand) Interest rates do not seem to be imbalanced, "says Miguel Zielonka, economist at EconoView Consulting.

"What we see is BCRA, which is currently trying to market, but given the incentive to PES the portfolio even if interest rates move downwards, it is an inadequate purchase," says Matisas Carugati, Management & Fit. The plan agrees that there is little flexibility to adapt to market changes. "I hope the IMF is very cyclical because it wants to do so and is a lender of last resort, but I hope it will have the potential to intervene with greater power if the BCRA is needed in the election year."

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