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Expectation: Define the BCRA strategy for February



The measure was already anticipated by BCRA President Guido Sandleris during his stay in Davos, when he said he was analyzing the extension of the foreign currency purchase quota to give the agency a greater margin for foreign exchange interventions. It should be recalled that, in the latest decision of the COPOM, it was decided that if the exchange rate were to be lower than the non-intervention zone, which increases by 2% per month, the primary objective of this increase will increase with daily purchases of up to 50 million dollars through the BCRA auctions (the amount was reduced from $ 150 million) without exceeding the 2% target in the accumulated month, which could be verified during January. If it is above the area, the target will be reduced along with the sale of up to $ 150 million by the agency.

Mauro Mazza, broker Bull Market Brokers, said that "the central bank must be prepared to liquidate gross crops because $ 50 million a day is not enough." He also recalled that "the government has agreed with the IMF to maintain a positive real rate of 15.7% a year, ie 1.3% per month." Mazza believes that "there is some reserve to keep rates down, but the BCRA will take some caution to avoid past mistakes." In an interview with an international body last year, the government has also pledged to prevent a revaluation of the exchange rate, which explains why a float group has been introduced that grows like inflation. Although the peso has appreciated in recent weeks, it remains at a high level after the devaluation in 2018. Despite the various purchases of BCRA ($ 510 million) and the ongoing Leliq cuts, the wholesale dollar trades for seven consecutive days under the "zone".

The fact that it must be borne in mind that between Tuesday and yesterday's month, Leliq accumulated two consecutive losses of 142.5 basis points (yesterday ended at 54.89%). LBO Inversiones said that "these declines were accompanied by large expansions of the BCRA and for a while they seemed to raise some concerns, as they could bring some pressure that was closed in February if they are very tight for the monthly target." But they stressed, that the monetary authority "has increased its presence in another instrument: banking passages that are transactions between banks and BCRA, where the first banks borrow for one day of money, thus reducing the currency base." And they explained that "the rate of passage (44.2% yesterday) is lower than in Leliq, so banks that were excluded at the BCRA auctions face an alternative at a lower rate." "This should increase the competitiveness of their proposals in offering reference rates, which could be a soft argument for this course," they added. And this may have its correlation in the price of the exchange rate.


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