The government has begun preparing for a more complex scenario that will test its wrist to control the dollar. The central bank will have to manage dwindling reserves without the help of the soybean dollar after its end last week. Therefore, all energies are focused on negotiations with the IMF, a chapter that will be closed in the coming weeks.
The incentive to soybeans at $ 300 allowed the monetary authority to buy almost US $ 1,500 million, of which the BCRA has already spent US $ 800 million – more than 50% – to contain financial dollars (CCL and MEP) below $ 500, according to sources close to the BCRA and private calculations. That was the cost that was paid after the run in April to stabilize the gap around 100%, a step up from 90% in March.
In this context, the official expectation is that the US $ 10,000 million in yuan of free availability of the Chinese swap will allow postponing the use of dollars in Chinese imports. The head of the Central Bank, Miguel Pesce, analyzed it on Monday with President Alberto Fernández at Casa Rosada, after his trip to the Asian giant with the delegation led by the Minister of Economy, Sergio Massa.
During the meeting, they talked about the economic situation in May, where the trap was tightened (freight, MEP, automotive, oil and provinces) to contain the outflow of foreign currency. And they talked about the prospects, in view of the maturities with the IMF, the definition of the electoral scenario and inflation in May, which will be known next week and could have approached 9%.
Massa's team, led by Leonardo Madcur and Gabriel Rubinstein, continued negotiations with the Fund by zoom on Monday. The officials are scheduled to travel next week to Washington (around June 14) and the minister will arrive a few days later (about June 18) to close the negotiations, which include the White House and the US Treasury.
The government seeks to release a US$ 4,000 million transfer that was scheduled for June, which would imply a waiver for the breach of goals. And it asks to advance disbursements of US $ 6,600 million from 2023. But it is not yet clear how much will be anticipated, how many funds can be used to calm the CCL and MEP, and what the agency's conditions will be.
Without the soybean dollar, the BCRA bought US $ 6 million on Monday in the exchange market, the lowest amount in the last four weeks. Although in the Ministry of Agriculture they maintain that there is no new incentive in the folder, in the corridors of that agency they assure that it is a measure that "is being evaluated."
"So far there are 3 wheels with the "soybean dollar" without soybeans and have settled an average of US $ 16 million per wheel more or less even. Of the 3, in the first two the Central retained everything and bought more, and in this one only US $ 6 million. It's going to be tough without a doubt, the soybean on pause expects better conditions as long as it can hold on," said Andres Reschini, analyst at F2 Solutions.
Amid the shortage of dollars, analysts do not rule out further tightening of currency restrictions. Massa analyzed on Monday with his team the status of complaints for exchange evasion. In the last revision of the agreement, the Government committed to advance in a reform of the Criminal Exchange Law.
The lack of dollars is not the only challenge. The minister prepares a new debt swap in pesos to reduce the $ 10 billion that matures between June and August, the regulation of the regime of promotion of the automotive industry to unlock investments, prizes and credits to the monotribute, and announcements on the payment of profits of the Christmas bonus.
Massa also has to define his political future. Next June 10 will be the congress of the Frente Renovador, prior to the presentation of electoral alliances on the 14th of this month. And on the 24th the candidacies must be defined. The minister seeks to occupy a central place in the next elections, after warning that he threw himself "on top of a bomb" when assuming the Economy button.
The question is how these political definitions will impact the ongoing dollarization and the ability of the Central Bank to control the eventual pressures.
"Although the economic team will seek at all costs to avoid a jump in the official exchange rate, wanting is not always power. The next quarter will be very complex, starting from negative net reserves and with high maturities. In this sense, although our base scenario contemplates an exchange rate slippage in line with inflation, the probability of not being able to avoid a discrete devaluation increases," the Capital Foundation assessed.
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