Argentine Central Bank Expects Its Reserves to Rise Soon

On Tuesday, Miguel Pesce, the president of the Central Bank of Argentina (BCRA), said that his institution has the appropriate levels of reserves to face its obligations, despite the fact that it had to face a strong purchase of foreign currency on Monday due to energy imports.

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Currently, the Central Bank is a net seller of foreign currency and barely has a stock of reserves of US$959 million. According to estimates by Portfolio Personal Inversiones (PPI), however, such a level of reserves would allow monetary authorities to continue carrying out sales operations for about 7 days.

“We have had lower levels than this and we were able to deal with the situation. And the same thing is going to happen in the coming months,” Pesce said and attributed the loss of reserves to both imports and the delay in the liquidation of the soybean export sector.

Previously, the BCRA approved a system of special accounts tied to the U.S. dollar for the entry of export liquidation advances. However, the negative streak in the exchange market does not stop and became the worst in three years.

According to the BCRA president, energy imports will decrease from US$2.4 billion in July to US$1.8 billion in August, which will allow the exchange balance to improve in September.

“At the end of August we could end up in a situation of a draw or a partial recovery of reserves,” Pesce said, but emphasizing that such a result depends on the slowdown in the demand for energy imports.

In Argentina, the lack of foreign currency is reflected in the widening gap between the official exchange rate and the exchange rate in informal markets, where the U.S. dollar is quoted 120 percent more expensive than the Central Bank rate.

After taking office as Economy Minister, Sergio Masa announced that he would strengthen monetary reserves through agreements with exporters for some US$5 billion and loans with international organizations, which would materialize in the next 60 days.