Dollar: maximum expectation in the market for the debut of the flotation bands

After the last week agreement between the government and the International Monetary Fund (IMF) reached an extension of the stand-by credit that Argentina received last June, the market remains cautious as regards the dollar flotation scheme between bonds ($ 34- $ 44) that the central bank will apply Monday under the leadership of Guido Slandleris, in the context of the new monetary policy that has been running since the last Friday.

In the pre-debut round of the new flotation band system, the currency market overheated and the greenback accelerated its upward trend until it was close to $ 42. and achieve a new nominal record in banks and exchange offices, according to the average of

With a bias buyer during the day, the ticket rose on Friday 3.5% or $ 1.41 to $ 41.94 an unprecedented price at closing, after exceeding $ 42 during a day, in which the BCRA again intervened in dollar futures. In fact, the quote at some banks, such as the Nation (usually with the lowest prices on the market), ended above $ 42 ($ 42.10).

For its part, in the Single and Free Exchange Market (MULC), the currency shot up 3.9% ($ 1.55) to $ 41.25, which meant a maximum of $ 41.50 in the session. It was at this level, where the BCRA appeared with a new intervention on the futures markets, which partially moderated the advance on the cash market, the amount of which rose by 17% to US $ 429 million. According to market participants, Banco Nación sold US $ 50 million in cash.

It should be remembered that last Wednesday, BCRA announced that a new monetary policy will be introduced from 1 October that will reduce inflation and regain a nominal anchor for the economy.

"The monetary goal is supplemented by the definition of intervention zones and no substitution intervention." The non-intervention zone is initially defined between $ 34 and $ 44, is adjusted daily at a rate of 3% per month until the end of the year and will be re-calibrated at the beginning. next year, the BCRA will allow the free float of the peso within this zone, as it is an adequate range of exchange rate parity ", the Central emphasized in his statement on Wednesday.

In this regard, he stated that in the event that the exchange rate is higher than the non-intervention zone, BCRA will carry out daily foreign currency sales of up to $ 150 million. He added that in the event that the exchange rate is lower than the non-intervention zone, he will be able to purchase foreign currency.

The BCRA considers that this regulation of intervention and non-intervention zones adequately combines the advantages of exchange rate flotation with the benefits of avoiding excessive exchange rate fluctuations, in a economy with a shallow financial market where the value of parity plays a leading role. role in determining inflation expectations.

The monetary authority also emphasized in the statement that the monetary objective will be implemented through daily transactions of Liquidity Letters (LELIQ) with banks. He also indicated that he will continue with LEBAC's disarmament scheme.

In this context, the price of liquidity accounts, Leliq, reached 65% annual levels in the Friday market from the previous 60%, according to operators. And they added that the rise in Leliq interest occurred when the price of the dollar hit historic minimum levels of $ 42.. In a statement, the exchange said that it undertook not to let the daily policy interest rate be lower than 60% per year until December 2018.

Finally, the Minister of Finance, Nicolás Dujovne said last Saturday that he trusts that the new monetary policy of the central bank "will reduce exchange rate volatility" and although he admitted there was a "loss of purchasing power", he said that "it will be reassembled in the next months when inflation is declining. "

"It is a very sound monetary policy, consistent and easy to understand, since the monetary base will not grow for several months, we will be able to lower exchange rate volatility," said Dujovne.

In statements to Radio Miter, the official said that "the basic solution here is to clean up the macro economy, to have a balance in public accounts, to lower inflation."

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