Why did the Central Bank cut its buying streak?

He Central Bank started the week in negative territory when registering a net selling balance of US$11 million for its intervention in the exchange market and is the fifth red in the Milei era, on a day of low volume of operations due to it being a holiday in the United States, where Memorial Day is celebrated. It is the first daily sale of dollars since April 29, when it had a negative result of US$92 million.

In this way, the monetary entity broke a buying streak of eighteen days consecutive, and reduced net purchases to $17,165 million since the government took office.

The operator Gustavo Quintanafrom PR Cambios, relativized today’s sale to iProfesional by pointing out that “Today there was a holiday in the USA, Therefore, it does not seem to me that the BCRA result is significant due to the impossibility of exporters entering foreign currency on the date.” The analyst considered that “Although soybean sales are somewhat lower than in previous years, income will surely increase.”

And although the liquidation of the harvest is coming slower than expected for this time, partly due to the bad weather and the rains that delayed it, although some operators also allude to a certain reluctance to export and that there could be an incentive to retain grains after the last BCRA rate reduction, given the low cost of leveraging pesos, waiting for a better exchange rate.

In this regard, a report by the consulting firm FMyA indicated that “Although 78% of soybeans were harvested (40 million tons of the 50 million expected harvest), only 6 million were sold with a “fixed price”; That is, 80% of the harvest needs to be sold.”

Reserves: changes in the blend dollar?

In this context, in recent days versions have emerged on the market that the dollar blendthe designed scheme that allows 80% to be settled at the value of the official exchange rate and 20% at the value of the Dollar Cash with Settlement (CCL).

The BCRA today registered a net selling balance of US$11 million, the fifth red in the Milei era

This measure was one of the factors that contributed to the accumulation of net reserves in the first months of Milei’s management, but in the latest IMF staff report the blend dollar would be eliminated at the end of June.

However, given that the pace of liquidation of the coarse harvest is below the average expected for May, versions emerged that this scheme could be changed to 70-30, although analysts rule out that possibility.

In this regard, the consultant FMyA stated: “During the week there was a rumor that, with the new CCL level, the current scheme for exporters would become 70/30 instead of 80/20; “We believe that this possibility is very distant.”. And he calculated that “With 20%, the BCRA will sacrifice US$9.5 billion until December; with 30%, US$14,000 million”.

The financial analyst Christian Butler also rejected a change by claiming that ““Whatever increases via the financial dollar you subtract from the official dollar, that is, you subtract from the BCRA the possibility of buying dollars, and the need is more to rebuild the reserves than to give more benefits to the countryside.”

“The Government is closer to thinking about eliminating the blend dollar after the harvest is over than about increasing it. What these rumors reflect is that the market continues to think that there is a delay with the exchange rate, which is why those rumors spark. Yes The IMF is asking you to take it out, expanding it would be the opposite, so maybe you don’t take it out immediately, but I don’t see that they are going to expand it”he judged.

In tune, the consultant Eco Go evaluated: “We do not believe that they will increase the blend to 70%-30% to encourage the offer in a context where the commitment included in the latest review of the agreement with the IMF is to eliminate it before June, something that is also a necessary condition for the “BCRA will continue buying dollars once the harvest is finished and the payment in import installments regime will operate starting in May.”

Analysts reject the idea that the blend dollar scheme will be changed to encourage the liquidation of the harvest

Reserves: fifth red in the Milei era

The BCRA registered this Monday a net selling balance of US$11 million for its intervention in the official exchange market, and it is the fifth red in the Milei era. The four previous negative balances had been verified on March 19 for US$73 million, on February 29 for US$142 million, on January 31 for US$10 million, and on April 29 for US$92 million.

In this way, the monetary entity cut a buying streak of eighteen consecutive rounds on a day where the blue dollar fell by $15 to close at $1,205, after the nominal historical maximum of $1,280 reached last Thursday. In the stock market segment, the dollar counted with settlement was traded at $1,244 and the MEP was offered at $1,228.

Despite the sale, the gross reserves stock international markets rose US$43 million compared to Friday, reaching US$29,156 million. Thus, the amount of gross international reserves increases by US$1,581 million in the month and by US$6,085 million during the year. Soon, an IMF disbursement of US$800 million should arrive to reinforce reserves when the organization’s board of directors formally approves the eighth review of the program.

Quintana indicated that the operated volume in the cash segment was US$196.41 million compared to US$343,037 million last Friday, and attributed the collapse to the holiday in the United States.

The inactivity in the main international financial market affected the income level of exportersforcing for the first time since April 29 the BCRA to intervene with sales to compensate for today’s lack of income,” he assured.

Quintana specified that the BCRA has accumulated net purchases for US$2,396 million so far in May and estimated that “the normalization of local activity starting tomorrow will surely bring a panorama similar to that of previous weeks, with greater income that will allow the monetary authority to recover the role of main buyer of foreign currency in the market”. With today’s unfavorable balance, lThe monetary institution has added net purchases of US$17,165 million since Javier Milei took office.

 
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