Why now the Central Bank does not stop buying dollars? – 01/14/2019

On Thursday he bought $ 20 million, on Friday $ 40 million and on Monday plus $ 50 million. O central bank now he focuses on buying foreign currency, but he can not make the price rise sharply.

At the beginning of the week the dollar ended at $ 37 at the wholesaler and US $ 38.06 in retail in a climate of currency exchange characterized by the greater supply of bills in the face of a clearly weaker demand.

Both the president of the Central, Guido Sandleris, like addiction, Gustavo Cañonero, they are very cautious when talking about the rising exchange rate in recent weeks.

Government sources point out, however, thata decision to buy more dollars by the BCRA responds to the fact that both companies and individuals are requiring more weights.

The lawsuit began in December, when demand for pesos, the opposite of dollarizationHe grew up above forecasts official The Central predicted that this demand could be met with a 6% increase in the amount of money and, finally, Found 10%.

Thus, both companies and savers they lose dollars to get pesos partially to meet payment commitments, but also take advantage of the high interest rates still paid by banks against expected inflation in the coming months.

The fall in the rate of dollarization last month and the beginning of this occurred simultaneously with a change in the result of the trade balance.

The sharp drop in imports in the heat of recession was matched by an improvement, albeit moderate, in exports. "Today there are five export dollars for each one that is required to import" has secured a renowned local money changer.

But the bottom line of financial calm is explained because the interest rates in pesos send and the possibility of a quiet dollar power to attractiveness fixed-term deposits in pesos in the short term.

The Badlar rate (for deposits of more than one million pesos) is 44.69% Yearly and the fixed term for smaller amounts, around 43.76%, that is, both, although they are falling, they are positive against projections of inflation this year that put it around 30%.

These high rates in real terms offered to peso holders are, in turn, supported by the fact that the Liquidity Letters (Leliq) that the Central Office places at the banks to obtain market weights pay 57.80% per annum. The Central Bank continued to reduce the Leliq that early in the week It was fixed at 57.80% per year. It is worth remembering that the rate was 70% in October 2018, when the new monetary regime began, and that ended last year around 60%. Until when and how fast will it fall?

In the Central they refuse to make categorical predictions on the subject understanding that it is a matter of fine adjustment and this depends in large part on the expectation that is generated around the duration of the calm of the exchange rate experienced by the market.

The operators highlighted the statement of the Secretary of Finance, Santiago Bausili, in relation to the Treasury will sell $ 10 billion market to meet fiscal needs.

These are IMF dollars added to income from wheat, corn and soybeans and in front of the fort fall in the demand for foreign currency to import they would define a fluid exchange structure for the first part of the year.

It is clear that the new framework also responds to variants of a less scared international financial environment by the possibility of a strong increase of the interest rate in the US and that, therefore, responds with less risk aversion and some revaluation of the currencies of the emerging countries.

The reign of the interest rate is the cause and consequence, also, of the official priority of consolidate the stability of the dollar in an attempt to reassure the price indexes in early 2019 that are already loaded by the rate of increases. The delicate financial chess proposed by the government demands to move the pieces with great prudence and everything indicates that the claims of the real economy they should wait.