Since the elections, the Central Bank of the Argentine Republic (BCRA) stopped intervening in the stock market and the MEP soared above $ 200.
However, that does not mean that the monetary authority has been unconcerned with what happens with the proxies that the market uses to see where the official currency can go. In fact, on the contrary, in the futures market it took its intervention to the peak of the Pesce era.
According to market estimates, the selling position of the monetary authority would be between US $ 6,200 and US $ 6,700 million. So far, the highest value was the one seen in October 2020, just shy of $ 5.7 billion.
In this way, the Central Bank continues to bet on moderating the rates on the Rofex and the Electronic Open Market (MAE) boards, to reduce exchange rate tensions in the official one.
“As of Friday, November 19, the open interest between Rofex and MAE was US $ 8,076 million, growing US $ 2,919 million compared to the end of October.“, consign a report of the Consultant 1816.
The document maintains that if all this increase was explained by the Central Bank, then the monetary authority is sold for US $ 6.534 million. “But if once again the movement of the open interest underestimated the BCRA’s sales, then the short position of the Central is even higher.“.
If these numbers are confirmed, the sales posture will be growing by leaps and bounds. It should be noted that the monetary authority closed September with sales of US $ 1.770 million and in October that number jumped to US $ 3.615 million.
In addition, the Central Bank will be pushing its possibilities to sell to the limit: for regulatory reasons it can only put on the table up to US $ 5 billion in Rofex and up to US $ 4 billion in MAE.
At the moment, the BCRA has been winning the arm wrestling to the market, since no discrete jump in the exchange rate has been validated and even the crawling peg continues in slow motion. It is estimated that between the beginning of the year and October, Pesce’s team raised about $ 14,500 million pesos for their participations.
“It is logical that the market seeks refuge and, somehow, ends up shocking the peso“, I considered Andrs Reschini, from F2 Financial Solutions.
Reschini added that the agents bet against the weight because they see “the lag of the exchange rate against inflation, a critical level of reserves, a gap above 100%, increasing and less effective exchange restrictions, more financing to the Treasury via issuance and the absence of an economic plan“.
Meanwhile, the fixed income strategist at Cohen Aliados Financiero, Toms Ruiz Palacios, I estimate that the BCRA’s sales position may be between US $ 6,200 and US $ 6,700 million.
And he indicated that, for the moment, the Central managed to lower the values of future dollars that are seen in Rofex: “The implied rates were compressing quite a bit, as were the prices. The market was very bought, waiting for an exchange rate adjustment and, not only that it did not occur, but the BCRA further reduced its devaluation rate, hitting hedging assets“.
Ruiz Palacios added that this action, added to fears about a possible split, “Caused investors to be cautious and greatly reduced the volume in these assets“
“Still, we are very cautious with this market: lThe situation remains as fragile as before and very little will be enough to re-ignite the appetite for coverage, even more so considering that the BCRA’s capacity to intervene in Rofex is almost exhausted“, he synthesized.
Currently, the future dollar to March is trading at $ 121.20 at Rofex. That value reaches $ 126.10 for April and $ 131.25 for May. The longest position, that is, October 2022, is located at $ 156.90.
“I believe that there was a strong compression of rates in futures, both due to the continuity of the intervention of the BCRA and due to the change in expectations that the post-election decisions of the Government implied.“he pointed Juan Pablo Di Iorio, an economist at ACM.
Regarding the latter, the analyst mentioned: “By reducing intervention in parallel markets, the BCRA’s net reserve position marginally improves for the coming months. On the other hand, the messages about reaching an agreement with the IMF in the short term not only give a horizon, but also reduce the potential source of demand for dollars that capital payments imply from March of next year.“.