Using reserves is swimming against the current

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Using reserves is swimming against the current

Despite a series of positive news, of which we had talked about in last week’s editorial, such as the formal approval of the agreement with the IMF, the inclusion of the Argentine ADR’s in MSCI emerging market index, the successful auctions of Lebacs and Treasury dollar Letes, and the good market reception towards the measures of the new Board of the Central Bank, the FX market still cannot find an equilibrium.

The peso’s fall led the Treasury to increase the daily amount of auctions with IMF resources from USD 100 to 150 million and, in addition, the Central Bank put an extra USD 300 million from its own reserves on the table to make the dollar go back to a 29-pesos wholesale closing price last week. Although the signs from yesterday and today were good, it is yet too early to claim victory.