The alternative dollar traded at 1,440 pesos yesterday, decreasing by five pesos after hitting a low of 1,435 earlier in the day. So far this month, it has gained 65 pesos, equating to a 4.8% increase.
The Central Bank has made significant purchases, acquiring 55 million US dollars in the market. On Monday, the total traded in the wholesale market hit 201.7 million dollars, which included the Central Bank’s purchases. Since the beginning of July, the bank has recorded a positive balance of 178 million dollars from its currency operations.
Meanwhile, international reserves fell by 144 million dollars, totaling 27.422 billion dollars, marking the lowest level since March 27. The decrease was influenced by sales amounting to 106 million dollars that occurred on July 19. The Central Bank’s activities in the wholesale market are accounted for with a one-day lag, referred to as "T+1".
As the financial week began, there was some relief for dollar-denominated bonds, with prices increasing throughout the day. It’s not entirely clear what triggered this rise—whether it was President Javier Milei’s promise to ensure debt payments "at all costs" or the positive atmosphere in international markets after Joe Biden announced he would not seek re-election in the U.S.
In a challenging dollar supply context, President Milei mentioned previously that the Central Bank could absorb losses of up to 3 billion dollars due to reserve build-up earlier in the year. Despite expectations of improved dollar inflows, those did not materialize significantly. As commitments in hard currency began to weigh on the economy, market anxiety grew, leading to a widening exchange rate gap. This prompted government officials to declare that accumulating dollar reserves was no longer a priority; instead, the focus shifted to reduce the supply of pesos to mitigate inflationary pressures.
Investor sentiment improved following President Milei’s remarks at the end of last week. His assurance that "we will pay no matter what" resonated well, especially given the potential for repo credit lines to secure payments not just for interest due on bonds but also for capital payments, raising investors’ confidence.
The government is currently negotiating with international banks for a loan of 2.8 billion dollars to cover debt maturities due in January. This effort aims to reassure markets that they will have the necessary funds to meet both capital and interest obligations to bondholders. However, concerns persist about the risks of using government securities as collateral, particularly given that country risk remains elevated above 1,500 points.
To read more about these developments, check out resources like Reuters or Bloomberg.
Image and News Source: https://www.infobae.com/economia/2024/07/23/dolar-hoy-en-vivo-a-cuanto-abre-este-lunes-22-de-julio-y-cual-es-el-precio-minuto-a-minuto/
