Confirmed: the BCRA is intervening in the exchange rate.

[Che1990]

We all knew it anyway, but yesterday it was confirmed that BCRA is intervening in the futures market to manipulate the exchange rate - and with a big increase in May too.

Link in English (hopefully it works): https://www-iprofesional-com.transl...uto&_x_tr_tl=en&_x_tr_hl=en-US&_x_tr_pto=wapp

 

[Redpossum]

1946 million is 1.9 billion, that's a LOT of moolah to be slinging around. And Milei just vetoed legislation that had passed Congress to help the victims of the terrible flood in Bahia Blanca. That seems to me like a strange set of priorities. As in, obsession level.

What on earth are they thinking?

Another question that occurs to me is, given that the blue dollar has crept up above 1200 in spite of nearly 2 billion in interventions, what would it do absent those interventions?

 

[Ronnie Hotdogs]

Isn’t that implicit in the part about them keeping the exchange rate in a defined range?

 

[IamWaldo]

If next 3-4 months will be like this too.. you look at burning 8-10 billion. That would keep it “stable” till the election

 

[LuckyLuke]

I'm not entirely sold that this was an intervention in the way that you are thinking. The BCRA per IMF "guidance" wouldn't intervene until the upper limit of the exchange rate range ($1400). There are however distortions in foreign trade where the demand in dollars for imports/exports can require the BCRA to inject liquidity. Although this is still notable to the blue market if it ultimately reduces net foreign reserves, it's not that the BCRA is stepping on the exchange rate per se.

I recently read that the momentary reduction of export taxes had produced record liquidations of crop yields which should bolster foreign reserves, though the program is expiring soon.

 

[aloevera]

1946 million is 1.9 billion, that's a LOT of moolah to be slinging around. And Milei just vetoed legislation that had passed Congress to help the victims of the terrible flood in Bahia Blanca. That seems to me like a strange set of priorities. As in, obsession level.

What on earth are they thinking?

Another question that occurs to me is, given that the blue dollar has crept up above 1200 in spite of nearly 2 billion in interventions, what would it do absent those interventions?

Taking out a $45 billion IMF loan was one of the greatest mistakes in Argentine history.

 

[Redpossum]

I'm not entirely sold that this was an intervention in the way that you are thinking. The BCRA per IMF "guidance" wouldn't intervene until the upper limit of the exchange rate range ($1400). There are however distortions in foreign trade where the demand in dollars for imports/exports can require the BCRA to inject liquidity. Although this is still notable to the blue market if it ultimately reduces net foreign reserves, it's not that the BCRA is stepping on the exchange rate per se.

I recently read that the momentary reduction of export taxes had produced record liquidations of crop yields which should bolster foreign reserves, though the program is expiring soon.

They promised the IMF they wouldn't intervene directly by selling dollars, like Macri did.

This meddling in the futures market is their way of getting around that pesky little promise.

 

[AdrianB]

Isn't it a bit weird there were interventions in 2023 and despite that the exchange rate followed the inflation but then from Feb 24 to Feb 25 there were no interventions at all but the exchange rate didn't change in a year?

 

[Che1990]

It’s insane isn’t it? If they have to spend that much to contain it. What should it be now? Read that October 2023’s level would be 3,500 right now.

 

[LuckyLuke]

They promised the IMF they wouldn't intervene directly by selling dollars, like Macri did.

This meddling in the futures market is their way of getting around that pesky little promise.

Perhaps, but IMO there's no fooling the IMF when you have 20 billion riding on it. If you can read this chart, so can they.

I have my own theory that Argentina is a stain on the IMF's public image. It knows that Milei is on board with the austerity they need for their cookie cutter "economic recovery program". They are willing to posture and telegraph support for Milei to win him future elections (and continue the program), but the truth is that the 20 billion is just refinancing old IMF debt. There's no magic public works, employment program, new export sector, etc. investment coming from these funds. It's just more austerity for more time and more tinkering with various tax and import/export restriction levers to see if an "economic recovery" eventually manifests.

If it didn't work the first time, double down for longer.