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Hope: Define the BCRA strategy for February

The event had already been scheduled by BCRA President Guido Sandler, while staying in Davos, stating that it was analyzing an increase in the foreign exchange quota in order for the agency to have a greater margin in interventions in the foreign exchange market. It is worth remembering that in the last decision of the Monetary Policy Committee (COPOM) it was decided that if the exchange rate is lower than the 2% intervention area per month, the main objective of this increase will be to make daily purchases of up to $ 50 million using BCRA auctions. (The amount was reduced from $ 150 million), up to 2% of the target accumulated month, which could be checked throughout January. If it is above the area, the target would be reduced to $ 150 million in sales by the agency.

In this line, Mauro Mazza, Bull Market Broker, said "The central bank must be ready to eliminate gross yields, as $ 50 million a day is not enough." In addition, he recalled that "the government agreed with the IMF to maintain a positive real rate of 15.7% per annum, ie 1.3% per month." Mazza believed that "there is some margin to keep the rates down, but BCRA will keep some caution to avoid past mistakes." In the talks with the international organization last year, the ruling party also pledged to prevent the exchange rate from rising again, which explains why the floating band, which is similar to inflation, was introduced. Although the peso has been appreciated in recent weeks, after 2018 devaluation it remains high. Despite various BCRA purchases (which reached USD 510 million per month) and continuous price cuts by Leliq, the wholesale dollar has traded for seven consecutive days under the "zone".

Keep in mind that from Tuesday to yesterday the Leliq rate accumulated two consecutive losses, which reached 142.5 basis points (yesterday 54.89%). LBO Inversiones said that "these falls were due to large BCRA extensions, and for a moment it seemed to cause some concern, because in February they were able to exert some pressure if they were very tense with the monthly target." But they stressed that the monetary authority "increased its presence in another instrument: bank fragments, which are transactions between banks and BCRA, where the former lend money to the last one day, thus reducing the monetary base." And they explained that "the throughput rate (yesterday's 44.2%) is lower than that of Leliq, so now the banks that were left in the BCRA auction faced a lower rate". "It should increase the competitiveness of the proposals in the benchmark bidding process, which could be a bearish argument for this rate," they added. And this could be due to the exchange rate.

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