The President of the BCRA, Miguel Ángel Pesce, asserted that the current exchange rate is competitive and that the BCRA seeks to prevent it from becoming undervalued. “The statistics of the multilateral real exchange rate show that the dollar exchange rate remains at a competitive level. We have not received any complaint about the exchange rate from the productive sector,” said President Pesce.
He also explained that, even though the demand for the build-up of foreign assets is high, it will decrease when Argentina resumes the path towards growth. In his words, “the reason behind this is the uncertainty caused by the complex debt restructuring process, which would naturally take several months. However, we are convinced that the close of that deal, expected to occur in the coming days, will give a positive sign to the market and will reduce the exchange rate gap.” Moreover, he claimed that the submission of the budget to the National Congress will be understood as another sign of certainty, which will lower the demand for “financial” dollars.
He was optimistic and forecasted that the economy will grow in the following months. “We believe that the close of the deal will bring certainty and that the productive sector will have better access to the forex market to satisfy its needs. We are looking forward to an improvement in expectations. In this scenario, there will be no reason to set new restrictions,” he explained.
As regards the level of reserves, he clearly stated that “the amount of reserves is daily published by the BCRA and it exceeds 43 billion. This amount is certified by the International Monetary Fund. It should be noted that the forex market can be managed with this level of reserves. We have successfully managed it so far and we can continue doing so in the future.”
He confirmed once again the BCRA’s commitment to rebuild the curve in pesos for sovereign bonds in the capital market. In this sense, he stated: “We have successfully refinanced debt maturities and we have started to finance a portion of primary deficit. If we continue moving in this direction, monetary issue will drop.”
Last, the BCRA’s President highlighted that a large portion of currency issued to meet the needs of the Treasury, amid the COVID-19 pandemic, has returned to the financial system and that, at the same time, there has been a sharp growth of capital markets. He closed his speech stating that “until July, capital markets developed by 75%, about ARS150 billion, with a 100% growth of corporate bonds´ financing and a 90% growth of deferred checks. Moreover, electronic invoices have recently become a tool for SMEs, and the use of e-checks is growing.”
August 25, 2020.