BCRA loses USD 700 million in the month

In the first week of August, the BCRA sold just over half of the dollars it lost in July. The dynamic requires urgent measures from the Government

By Pilar Wolffelt

05/08/2022 – 6:08 p.m.

This Friday, the Central Bank of the Argentine Republic (BCRA) sold US$95 million in the official foreign exchange market, the MULC, and the dynamics are already becoming more than worrying because the level of losses in this way is already it reached US$700 million in the first week of August alone.

Although it is true that so far in the current administration of the Government, from December 2019 to date, the BCRA has a positive balance in that market of US$2,000 million, the acceleration of the dynamics of loss of reserves that has been observed since July.

And it is that Last month was “the hardest the BCRA had since the pandemic”, as the economist from the University of Avellaneda Federico Vaccarezza mentions to iProfesional. In total, last month it sold $1.2 billion and in August it has lost just over half that amount so far.

Dollars for energy: the BCRA’s big problem

The analyst points out that “everyone sees Sergio Massa as if he were the Messiah, hoping that he will somehow reverse this trend, but it is not that easy.”

It details, as many analysts maintain, that the main big problem for the Central is energy purchases. As, During the first half of 2021, fuel purchases totaled US$1,226 million, while in the same period of 2022 they reached US$4,700 millionwhich implies a growth of 300% year-on-year. While, to date, the total is close to US $ 6,000 million

This situation is directly related to the fall in the trade balance, which in the first half of the year reached US$3,195 million, with a fall of 43.8% compared to the same period of the previous year. The trend continues and Vaccarezza warns that “If we project this from now to December, we are talking about US$6,000 of net merchandise trade surplus, while last year, with lower international prices, we had double“.

The international reserves of the BCRA have been badly hit.

The international reserves of the BCRA have been badly hit.

On the other hand, although he recognizes other issues that affect the dynamics of the BCRA, such as the growth of outgoing tourism and card spending in dollars, he assesses that these are not the main problems for attracting dollars.

Thus, it indicates that, from now on, the market and the Government will be waiting for the evolution of the trade balance, which is the main generator of foreign exchange. “If the trade balance is not increased, there are no dollars,” she warns.

Vaccarezza believes that, in order to achieve this goal, they have to increase exports and decrease imports. And along these lines are the latest announcements by Economy Minister Sergio Massa, who put one of the focuses of the announced measures on recovering the BCRA’s reserve accumulation capacity.

Dollars for the BCRA: Massa’s plan

Let us remember that it established a reserve recovery plan that contemplates that there will be a advancement of exports, with the value chains of fishing, agriculture, mining and other sectors that will enter in the next 60 days for a total of US$5,000 million.

In addition, it was agreed to execute disbursements of US$1.2 billion by international organizations by current programs and others under study. There will also be a new program with CAF with contributions of US$750 million. And he announced that four REPO offers are being negotiated to strengthen reserves and repurchase sovereign debt.

Massa announced lines of action to recover reserves.

Massa announced lines of action to recover reserves.

But, on the other hand, it contemplates a fine tuning and review of imports to adjust that account and guarantee that the dollars that leave through that route are exclusively necessary.

And, in that sense, the minister advanced that they are going to promote the financing of exports. The objective is to increase the volume, but also the number of Argentine companies that export. Thus, he anticipated that they will launch a credit program at promotional rates and a guarantee scheme for leading exporters.

Meanwhile, on the other hand, reported the implementation of a traceability system for foreign trade with the idea of ​​having greater control and transparency in the use of foreign currency for imports.

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