Gustavo Bazzan
10/01/2020 - 20:35
Clarín.com
Economy
The Central Bank announced tonight that it will
modify the tool to regulate the official exchange rate
.
Specifically, he pointed out that he is
abandoning the daily mini-depreciation strategy
and from now on will allow
greater volatility
in the exchange rate variation.
In other words, it
will admit major devaluations
of the peso if it deems it necessary.
Until now,
Miguel Pesce
, head of the BCRA, had been applying a kind of
"small table"
that allowed
mini-depreciation of the peso
against the dollar but
at a very predictable rate.
In financial jargon, this policy is known as
"crawling peg"
, that is, small daily devaluation steps.
This strategy, combined with not very high active interest rates, encouraged the market to
take on debt in pesos,
given that the financial cost of that debt was
lower than that of paying off the dollars
to pay off said debt in pesos.
What happened was that
importers'
borrowing in pesos was promoted
to buy foreign currency.
And at the same time the exporters did not liquidate dollars.
Specifically, the Central Bank announced that it decided “to
abandon the uniform devaluation mechanism,
granting greater volatility and maintaining the competitive level of the multilateral real exchange rate.
Within the framework of the
managed float
strategy
,
the daily rate of depreciation
will gradually adapt to the needs of the situation
. "
It is possible that with this measure the market understands that
the rate of devaluation of the peso
could
accelerate
.
It remains to be seen if the promise of positive interest rates in pesos, and the tax incentives to invest in assets in pesos, can counteract that initial impression that the market could have.
In this sense, analyst
Federico Furiase
pointed out: "I understand that if inflation accelerates, they will accompany a greater devaluation of the peso. But on the other hand they raise the rate of passive repo to 24 but lower the limit of bank leliqs, At the same time that the Ministry of Finance announces the placement of dollar linked debt. They are trying to raise financing in pesos from the banks, especially after they increased the limit on holding treasury securities from 50 to 75% of the computable equity ratio. "
In addition, the Central precisely reported
an increase in the passive rate for repos.
That is, it will pay a higher rate for the pesos that the banks place in pesos to the BCRA, outside of the Leliq.
In this sense, the BCRA said that "In the framework of updating the monetary policy guidelines, the board of directors of the Central Bank of the Argentine Republic decided" to modify the one-day repo repo rate and set
it to 24%, which implies an increase of five percentage points with respect to the current level of 19%
.
The decision seeks to increase the attractiveness of short-term local currency financial instruments, in order to discourage behavior that could affect the foreign exchange market in a context of seasonal tensions that are currently registered.
Simultaneously, the monetary policy will manage the stock of Liquidity Letters (LELIQ) in order to minimize the impact of the decision on the cost of sterilization ”.
He will also give
more importance to the yuan
, the Chinese currency, although he clarified that
it is not planned to activate the currency swap.
He put it this way: “A round will be opened in the MAE (Electronic Open Market) and authorizations will be processed in the Rofex to allow the purchase of the yuan renminbi against the Argentine peso for
foreign trade operations
.
It will also open the possibility of entering into futures contracts denominated in reminbi yuan. "
The Central clarified that “this measure does not imply that physical yuan can be purchased for hoarding, nor will the opening of bank accounts denominated in that currency be allowed.
It is intended to facilitate foreign trade operations. "
The BCRA will use its reserves in that currency to respond for these operations and
the activation of the currency swap signed with the People's Bank of China is not planned.
"
There will also be an incentive to invest dollars that come from abroad in the form of new Direct Foreign Investments "allowing them to have free access to the official market to
repatriate investments from the first year after they are made
."
Finally, a
new restriction on the purchase of dollars
was formalized
.
“The CUIT will be blocked for the purchase for the accumulation of foreign currency of the officials of the highest level of the national public administration up to the rank of undersecretaries or equivalent, of national legislators (deputies and senators), and the directors of public banks including those of the BCRA . "
Look also
One by one all the economic measures announced by the Government
The CRA and SRA affirm that a temporary reduction in withholdings will only favor exporting companies