Thursday , February 25 2021

Expectation: to define the BCRA's strategy for February

The measure had already been anticipated by BCRA president Guido Sandleris during his stay in Davos when he said he was looking at the increase in the quota for buying foreign currency to give the agency room to intervene in the foreign exchange market. It is worth remembering that in the last decision of the Monetary Policy Committee (COPOM) it was resolved that if the exchange rate were below the zone of nonintervention, which grows at a rate of 2% per month, the basic target This increase will increase with daily purchases of up to US $ 50 million through BCRA auctions (the value was reduced by US $ 150 million), without exceeding 2% of the target in the accumulated month, something that could be verified during January. If this is located above the area, the goal will be reduced along with sales of up to $ 150 million made by the agency.

In this line, Mauro Mazza, Bull Market Brokers, said that "the Central Bank has to be prepared for the settlement of the gross crop, because with $ 50 million a day is not enough." In addition, he recalled that "the government agreed with the IMF to maintain a real positive rate of 15.7% annualized, that is, 1.3% per month." Mazza said that "there is some scope for rates to continue to fall, but the BCRA will be careful to avoid making mistakes of the past." In talks with the international body last year, the party also pledged to prevent the exchange rate from appreciating again, which explains why a floating band that grows at a rate similar to inflation has been imposed. Although the peso appreciated in recent weeks, it still remains at high levels after the devaluation of 2018. And despite the BCRA's various purchases (worth USD510 million in the month) and the continued fall in Leliq's rates, has been trading for seven consecutive days below the "zone".

A fact to keep in mind is that between Tuesday and yesterday, the Leliq rate accumulated two consecutive losses in the amount of 142.5 basis points (yesterday closed at 54.89%). LBO Inversiones said that "these falls were accompanied by large expansions by the BCRA and for a moment they seemed to generate some concern as they could put some pressure contracted in February if they are too tight for the month's objective." But they stressed that the monetary authority "increased its presence in another instrument: the banking passages, which are transactions between banks and the BCRA, in which the first lends money to the second for a day, thus reducing the monetary base." And they explained that "the rate of the passes (yesterday at 44.2%) is lower than that of Leliq, so now the banks that were left out in the BCRA auction faced a lower rate alternative." "This should increase the competitiveness of their bidding in benchmark bidding, which could be a bearish argument for that rate," they added. And this could have its correlate in the exchange rate price.

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