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The Central Bank accelerates financing to the Treasury, but increases its debt to contain the rise of the blue dollar and inflation

In October the blue dollar hit several highs and reached $ 198 about the last week of the month. The fundamental fuel for this escalation is the large amount of pesos circulating in the economy.

The Treasury finances a part of its expenses in the debt market, where it places bonds. However, the funds you get they are not enough to cover the expenses growing and, therefore, must resort to the Central Bank assistance (BCRA), which issues money to collaborate with the Treasury.

Read also: Deficit reduction and less dependence on the BCRA: the results that the Government wants to show before the elections

In October the organism that leads Miguel Pesce accelerated expansion monetary and He turned over to the Treasury about $ 352,000 million, the highest figure since May 2020, when the State faced extraordinary expenses due to the pandemic. However, it was also the greater the rate at which he absorbed weights to try to prevent them from being used to demand dollars.

Monetary assistance to the Treasury during October of this year was the highest since May 2020. (Photo: Equilibra).
Monetary assistance to the Treasury during October of this year was the highest since May 2020. (Photo: Equilibra).

“Of this sum, $ 92.00 million are still kept in government accounts at the BCRA and do not represent issuance, and $ 21,000 million were profits to buy foreign currency mainly for the payment of debt, so in total the Treasury was responsible for an injection of $ 239,000 million in the month “, said the consultant LCG.

Fuel for the blue dollar

The Treasury uses the pesos it receives from the BCRA to meet its expenses. Among them, the payment of retirements and pensions or the salaries of public employees. The Government hopes that this issuance will support the consumption and boost recovery.

Read also: Blue dollar today: how much it is trading at this Friday, November 5

The collateral effect of that plan is that a very high demand for goods can reheat prices. This, in turn, leads to another phenomenon: in the face of persistent inflation, some people and companies prefer dollarize your savings before losing purchasing power. For this reason, the expansionary policy of the BCRA puts pressure on the exchange rate.

The Central Bank accelerates financing to the Treasury, but increases its debt to contain the rise of the blue dollar and inflation

Either in the official market, where the number of savers who use their quota of US $ 200 grows month by month, or in the alternative segments, the demand for foreign currency grows and boosts free quotes. Precisely, in October the blue dollar added $ 11.50 and marked a maximum of $ 198, which was exceeded in the last week, when the value reached $ 200.

More debt for the Central

The BCRA limits the movements of the US currency in all the markets it controls: the official one and some financial segments. However, to try to contain the blue and other free exchange rates, the agency went out to Aspire part of the pesos it issued. According LCG, the entity he got back $ 95 out of every $ 100 he injected to finance the treasury.

Read also: The blue dollar reached $ 200 and the free “cash with liquid” exceeded $ 217: real value or exaggeration?

In October it withdrew about $ 245,000 million from the market through its two debt instruments: the 1- and 7-day passes and the Leliq, which mature monthly. The stock of both instruments it already amounts to about $ 4.5 billion and continues to rise because, upon maturity, the BCRA must pay the interest and then try to absorb it again. In fact, the payment of those rates was the second factor of monetary emission last month, since they totaled $ 118,000 million.

Central Bank financing to the Treasury already represents 3% of GDP.  (Photo: Balance).
Central Bank financing to the Treasury already represents 3% of GDP. (Photo: Balance).

As a consequence of the placement of debt to withdraw pesos, the monthly balance was a $ 69,000 million issuance, the smallest of the last three months. ”In the annual comparison, the base reflects a 14% real setting and in relation to GDP it is equivalent to 7.2%, which means a cut of 1.7 percentage points in one year ”, stated LCG.

To remove more weights, the body could increase the interest rate that pays for the debt it issues. However, he kept it fixed and below 40%, that is, it loses against inflation. The treasure, instead, raised yields that validated at the time of placing bonds and capture genuine financing instead of resorting to the BCRA. “It started paying effective rates (TEA) of 42% around 42% in the first quarter of the year, and is already validating an TEA above 48% for its three-month placements,” said the consulting firm Equilibra.

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HELEN HERNANDEZ

Helen Hernandez is our best writer. Helen writes about social news and celebrity gossip. She loves watching movies since childhood. Email: Helen@oicanadian.com Phone : +1 281-333-2229

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