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Fear for the reserves of the Central Bank: they stagnated in the quarter that enters the field dollars

2020-07-04T18:59:35.892Z


The demand of importers, who rushed to buy foreign currency to pay off debts, took a good part of the dollars that exporters entered.


Gustavo Bazzan

07/03/2020 - 20:11

  • Clarín.com
  • Economy
  • Economy

It is often said that April, May and June make up the "golden quarter" of the Argentine economy. In this period the bulk of the dollars produced by the field enter the country. There is a direct impact on economic activity and also on the reserves of the Central Bank.

This year things are not going well . In activity, it is obvious. Nor on the subject of reservations. Today, at the end of the second quarter, reserves are at US $ 43,243 million, almost at the same level as the US $ 43,561 observed three months ago.

There was no possibility of accumulating dollars, despite the stocks, since five coupons of bond interest for more than 1,100 million dollars were not paid . Two main reasons. A large part of the dollars that should have entered the second quarter entered the Central Bank at the end of 2019, because agro-exporters rushed to settle foreign currency before being hit by a rise in withholdings. The second reason is perhaps more concerning. As financing for importers was cut, this sector increased the demand for foreign exchange to the only available seller: the Central Bank. The purchases were due to haste to close debts with external suppliers in fear of a devaluation and the possibility that the currency tap will be closed in defense of the dwindling stock of reserves.

The phenomenon of stagnant reserves was highlighted this week by economist Hernán del Villar , from consulting firm Alpha, at a seminar he offered to the clients of Quinquela investment funds. Also in the latest report by consultant Daniel Marx of Quantum.

Del Villar pointed out that April and May were bad, because more dollars came out than what went in . “From April to July, dollars are usually left over, and that is used to continue providing dollars for the rest of the year. But this year this did not happen, it was a worse quarter than expected, because the foreign exchange trade balance generated income in these months of 300 to 400 million, and a year ago it reached 2,000 million ”.

To this problem, says Del Villar, the demand for hoarding is added . In April there were 250 million, about 450 million in May and - as Clarín reported on Friday, 650 million in June. “In the last semester it is complicated. The government needs to buy dollars, and the level of net reserves is very tight. In addition, the delay in the debt agreement made us pay close to $ 4.5 billion in the first quarter, which is missing today and we need it. " 

For his part, Daniel Marx pointed out that, looking at the BCRA's May Exchange Balance, it appears that the trade balance on a cash basis is less than the trade balance of the balance of payments, reversing what was verified in 2018 and 2019 .

“In those years, the balance on a cash basis was lower than the balance of foreign trade operations by US $ 6,072 million and US $ 4,495 million, respectively. In contrast, in the same period of 2020 the balance is higher by US $ 2,927 million . "It is appreciated that this change is mainly due to movements associated with imports . "

In the first months of 2018 and 2019, the value of imported products exceeded the payments made for this concept by US $ 9,121 million and US $ 8,289 million. In contrast, in 2020, payments exceeded the income from goods to the country by US $ 497 million , that is, compared to 2019, payments increased by US $ 3,793 million, while imports decreased by US $ 4,993 million. Marx says that "part of that can be explained by reduced imports, but it is also noted that the financing period for the imports that have occurred is reduced."

Marx concludes that “given the magnitude of the foreign exchange movements corresponding to foreign trade, their normalization would have notable effects in alleviating exchange rate and reserve pressures on the BCRA. "

Del Villar is more cautious. In his opinion, the corollary of this, with or without debt settlement is: more controls on the sale of dollars or a PAIS tax on the purchase of foreign exchange with an aliquot greater than the current 30%.

Source: clarin

All business articles on 2020-07-04

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