The exchange rate issue is at the center of economic debates. Not only because of the overheating of parallel dollars in recent days; also due to the level of the real exchange rate, the growing difficulties of the Central Bank in purchasing reserves, the upcoming maturities of debt in dollars and doubts about the prospects for opening the exchange rate. Incipiently, a point appears, initially of lesser magnitude, but that will have an impact in the coming months: the appearance of a factor that tended to “inflate” the supply of foreign currency starting in March, which will soon turn around and add additional pressure on the BCRA coffers.
Is about loans in foreign currency granted by local banksthat they shot up in March and April. In that period, the granting grew 518% compared to the average level registered in years of exchange stocks, according to calculations by economist Damián Pierri. The estimate comes from data from the Central Bank’s Exchange Balance, which shows that in March, US$979 million were awarded in gross terms of this type of credit and in April, US$830 million. The monthly average since the entry into force of the current stocks (in August 2019) is US$146 million.
These loans in dollars obtained by companies in the local market, which are settled by regulation (80% in the official market and 20% in the dollar CCL in the case of export pre-financing and everything in the official in the case of a regular credit), In these months they added an additional supply of foreign currency that helped the BCRA to buy dollars. Even more so considering that, coming from a period of low level of operations of this type of financing, the maturities to be settled are limited.
Dollar, loans in foreign currency and the impact on reserves
Thus, according to the balance sheet of the entity chaired by Santiago Bausili, local financial loans in foreign currency They left a net favorable balance of US$794 million in March and US$542 million in April. The numbers contrast with the previous eleven months, of which seven showed a deficit balance in this way. The impact is not minor: according to Pierri, Without this growth in dollar loans, gross reserves would have fallen by US$626 million in the March-April two-month period. instead of closing slightly higher, as happened.
But the effect won’t last forever. And it is something that official offices know.. “Today there is a very high net flow of foreign currency income through this route because the old credits were very few, so the output is small. And it is expected that this will be a peak because local loans in foreign currency have never gone much higher. So, now you just have to go down,” explained Pierri, who is an associate researcher at the Interdisciplinary Institute of Political Economy of Buenos Aires of the UBA and CONICET, in dialogue with Ámbito.
This implies that, When these credits begin to expire, companies will go look for the dollars at the Central to cancel debts with their banks, something that the current stocks do not restrict. That is to say, what now inflates the supply will add pressure on the demand side of foreign currency at times that are seasonally more unfavorable for international reserves, in which it is assumed that the BCRA will become a net seller.
Who is requesting these loans? According to Pierri, the strong growth is not fully explained by the pre-financing of exports by local banks which, although advancing, do so at a much more moderate magnitude. Nor by arbitration since the BCRA’s lowering of rates makes it less attractive. “There is genuine credit especially to energy and chemical companies that decide to take risk with rates of 2% per year in dollars,” the economist told Ámbito. Companies that ultimately choose to be exposed with debts in foreign currency.
City sources indicated that banks are using it as a way to seek greater profitability and grant it to firms that, by regulation, have to generate foreign currency. Companies, meanwhile, are trying to take advantage of the low rates at which this financing is offered, especially those that trust that the economic team will avoid a new devaluation jump.
But, beyond the risk that companies decide to take, there are concrete implications for future exchange rate dynamics. A BCRA that is having difficulties in scaling the accumulation of reserves (in the middle of a heavy harvest, with import payments still pending and with the anabolic that represents the liquidation of local loans in foreign currency) will then have to allocate foreign currency for their cancellation. “Not only is he buying little (more or less US$50 million a day) when he should be buying US$200 million, but in September or December, when he should be selling US$100 million, he will be selling $200 million”, illustrated Pierri.
Dollar, stocks and tension in the markets
In short, it is one more element of the many that reflect the challenges that the Government will have in the face of an opening of the stocks that does not yet have a defined date. Luis Caputo himself pointed out days ago at the IAEF that the conditions to do so are not yet in place. As this medium pointed out, the market is already noticing the dynamics of commercial debt that continues to rise and a dismantling of the Central Bank’s remunerated liabilities that leads to an increase in the Treasury’s debt in pesos, with short-term maturities that grow. .
For now, the initial euphoria was mutating in recent days: parallel dollars rose, bonds fell and country risk rose. Added to the impact of the latest rate cut were warnings about the delay of the official dollar, the slowdown in BCRA purchases and concern about the probable payment of the maturities of the swap with China in months in which already There are debt commitments in dollars with bondholders and the IMF.
