a day marked by rumors and denials of the BCRA / Argentina News

This Monday, The Central Bank sold US $ 70 million in the foreign exchange market on a day in which there was a strong demand from banks to hedge against an increase in withdrawals of funds in foreign currency by customers due to the rumors that ran in the city. “Reserves fell by US $ 100 million, although we must deduct from there what the BCRA sold MAE, so there could be an outflow of between US $ 30 and US $ 70 million,” an expert economist on the subject explains to iProfesional. .

We will still have to wait for a source from a bank to confirm effectively or not that the increased demand they expected was made effective or not (many say it did) and at what level it did. For now, it is only a search for coverage of the entities before a possible rebound effect of the news that was spread from social networks and we will have to see how the demand for dollars of the entities behaves tomorrow to understand the symptoms.

The truth is that, thus, the BCRA continues its predominantly selling trend in November given that, so far this month, it has already shed US $ 750 million.

While, the prices of the different exchange rates, had a second day down (The first was on Friday), since the Cash With Settlement that is traded against the AL30 bonds closed at $ 212.59 and the MEP, below $ 200. Meanwhile, the blue remained at $ 201 and the SENEBI dollar (CCL that is traded in the wholesale market) closed on Monday at $ 212, which surprised traders.

Looking for explanations

Some explain this behavior as a stop in the post-election inflationary expectation until we see what happens with the Monetary Fund and the Multi-Year Plan. Others explain that it may be a trend towards parity between exchange rates, which is combined with a calm blue these days, which pulls the other free dollars down.

“The truth, the reason I see for this behavior is that, as a result of the latest measures, banks should lower their exposure“A market source told iProfesional. It happens that last Thursday, the BCRA reported that it had made the decision to relax the recent regulations that restricted access to the exchange market for banks. He was referring to a new provision that established that the entities of the banking financial system could return to a neutral exchange position of cash in foreign currency.

The BCRA took several controversial measures to control the outflow of reserves.

Calming rumors

Rumor 1: banks forced to sell. At first, the measure was received without fuss by the market, but with the passing of the hours, some rumors that banks were forced to sell their dollars for this decision and that the BCRA would receive US $ 800 million in this way. , they began to shake the hornet’s nest.

Sources of the economic team denied that news to iProfessional. “What is established is that entities may not exceed 0% of the Net Global Position. After the last regulation, there were banks that were left with a positive position and others, negative. At the end of the month that rule expires and it was not possible to go back to the previous one, because it implied that they could buy up to a billion. For this reason, to give the system balance and that the banks remain in equality, the neutral position was put, “they detailed.

This implies that the banks that were positive have to sell and those that were negative have to buy and, although the BCRA does not have the position of each bank, but only the overall position of the system, a very fine calculation cannot be made, but they assure that, “in a global way, it remains neutral for the system”

Rumor 2: The ghost of the playpen. Nevertheless, That news brought more queue, since rumors came that scared the savers a lot (Understandable in an Argentina in which 2001 will soon be 20 years old and in which the memory of the corralito is still fresh, but there are also those who are in charge of refloating in the face of every difficult situation in the national economy).

Last Friday and Monday, the corridors of the entity were loaded with tension since the authorities had to deny, through a statement, versions that circulated, according to sources of the economic team “with the deliberate purpose of generating a run”, of that the decisions that the Central made last week regarding the Global Net Position in Foreign Currency of the financial entities had an effect on the deposits in dollars in the system. Thus, they anticipated that The BCRA will initiate an investigation to determine if it is appropriate to carry out criminal complaints against those who spread this falsehood.

“It has no impact on deposits or on the assets that back them,” they clarified. And they explained that banks must have a neutral exchange position and pointed out that, precisely, deposits being a liability for entities, must be backed by investments in that currency.

“All foreign currency deposits have assets in the same currency that back them. Additionally, there is a specific regulation with more than 20 years of validity that particularly requires that deposits in dollars be backed with assets in dollars.“explained the statement in which it was also highlighted that” financial entities also have record liquidity in dollars and pesos. ”

It should be noted in this regard that, as Government sources informed iProfesional, deposits in dollars are a liability and, as a rule, the assets as a counterpart of this liability have to be deposited in the BCRA, loaned to the exporter in cash dollars. Thus, by definition, a deposit is neutral and does not touch Global Net Position in Foreign Currency. “A bank can never have a negative PGN for deposits, but it can have a negative PGN for investments,” they detail.

For its part, a bank source assured that “the resolution refers only and exclusively to the cash dollars that banks have above their net worth, remember that deposits are not considered part of the banks’ net worth and are liabilities and assets respectively “. Thus, it details that, in summary, the measure affects only the banks’ own investment portfolio and not customer deposits.

In summary:

• Banks can issue dollar debt or have dollar investments. That is what is regulated: it is said that they cannot have more dollars than they need to cover the debt they have issued.
• When there is an oversupply of dollars, the BCRA increases the possibility of holding banks so that they absorb dollars and avoid an appreciation of the peso. When dollars are lacking, the BCRA makes the banks lower that holding so that they get rid of dollars. This time, none of these effects was sought.
• The banks had until November the possibility of buying about US $ 1 billion, at the beginning of November, it was decided that they could not increase their holding of dollars compared to what they had (some came with the maximum level of dollars and others did not) .

“Now it was decided to balance the system and say that all banks have the same position,” they point out, from the economic team. Although in the market they continue to distrust and do not take their eyes off the next step.

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