Milei moves to aid peso as election roils markets

[MilHojas]

Milei moves to aid peso as election roils markets

Intervention is the latest bid to halt a sell-off that has rattled its financial markets.

www.batimes.com.ar

 

[FrankPintor]

I understand that this is yet another breach of the IMF agreement. The government is only supposed to intervene if the Peso hits the upper or the lower band limits: the upper limit would be about 1465 Pesos per Dollar (it increases by 2% per month).

Supposedly, the central bank will not use IMF funding to buy Dollars... right...

There is no plan, nor was there ever a plan. Just get to the mid-term elections.

 

[LuckyLuke]

I understand that this is yet another breach of the IMF agreement. The government is only supposed to intervene if the Peso hits the upper or the lower band limits: the upper limit would be about 1465 Pesos per Dollar (it increases by 2% per month).

Supposedly, the central bank will not use IMF funding to buy Dollars... right...

There is no plan, nor was there ever a plan. Just get to the mid-term elections.

That's why they intervened with Treasury funds instead of the BCRA reserves. The net reserves didn't go down, so everything is "great". Except those Treasury funds come from tax payers.

Imagine your entire city being flooded in Bahia Blanca and the Government saying no hay plata.

Imagine being a Jubilado scraping by and being told no hay plata. Public schools, public hospitals, food banks, disability benefits, NO HAY PLATA.

Only to then see the plata magically appear to keep the dollar from rising. An embarrassing move that will only further signal political and economic weakness.

 

[FrankPintor]

Well, whatever the government is doing to prop up the Peso, it would appear not to be working:


I wonder how many Dollars they’ve burned through already? Oh, and for those who claimed Milei has reduced inflation, have a look at this:



And remember that a part of 2023 more properly belongs to Milei, with his December 2023 devaluation. Doesn’t look so good after all, really.

 

[LuckyLuke]

It certainly does seem to be the case.

It's important to keep in mind with presidential charts like the above what the financial context was at the time. Kristina was able to literally pilfer foreign reserves using LEFI instruments to disguise much of the inflationary actions, while Macri had an enormous IMF bailout at his disposal. Alberto was left with the mess of both his predecessors. That Milei was able to disarm the LEFI bomb with a Superavit is laudable. However, he now has his own IMF bailout to contend and his methods of strangling the circulation of pesos to prop it's value is backfiring hard on the economy.

The Government is now mulling reducing the domestic bank foreign currency requirements to free up what dollars they are required to have on hand. Another temporary band-aid to get to election day.

 

[Jimbob]

Like a race to the line before the money runs out, it's going to be a fascinating finish.

 

[FrankPintor]

USD 500 million burnt so far to defend the exchange rate:

Torniquete cambiario: calculan que el Gobierno sacrificó US$ 500 millones para neutralizar al dólar antes de las elecciones

Estimaciones del mercado afirman que el Tesoro desembolsó la millonaria cifra entre el martes y el viernes. Además, detectaron una fuerte intervención en el mercado de futuros. Los cuestionamientos por la falta de datos oficiales.

www.perfil.com

Our tax Dollars hard at work.

 

[sergio]

USD 500 million burnt so far to defend the exchange rate:

Torniquete cambiario: calculan que el Gobierno sacrificó US$ 500 millones para neutralizar al dólar antes de las elecciones

Estimaciones del mercado afirman que el Tesoro desembolsó la millonaria cifra entre el martes y el viernes. Además, detectaron una fuerte intervención en el mercado de futuros. Los cuestionamientos por la falta de datos oficiales.

www.perfil.com

Our tax Dollars hard at work.

Since it's IMF money it comes from the US and other countries tax dollars

 

[FrankPintor]

Since it's IMF money it comes from the US and other countries tax dollars

From @LuckyLuke ’ post #3 above:

“That's why they intervened with Treasury funds instead of the BCRA reserves. The net reserves didn't go down, so everything is "great". Except those Treasury funds come from tax payers”.

So our tax Dollars after all?