A call for solidarity: “savers and investors, do not rush to make decisions if you believe that the Government will devalue”. At least, he won’t, in his right mind, until next Thursday. Why? very simple, the Banco Central (BCRA), who also slowed down the rate of daily devaluation in recent days, will not shoot himself in the foot. At least, it should not do it, if in the directory of the BCRA the spirit of survival prevails and the fear of future questions about the duties of a public official.
It happens that next Wednesday the futures contracts of dollar. There are open positions in the market for approximately US$8.5 billion. That is what is registered in the two markets where these hedges are operated for the exchange rate, the ROFEX and the MAE.
What is the relationship between this data and the speculation of a devaluation? That precisely the main seller of contracts of future dollar is he BCRAnot to say the only one.
A small paragraph to refresh what we are talking about: when a person or company wants to be covered, in the sense of taking out insurance, in this case on the value of the official exchange rate, they go to the futures market and buy coverage that provides the right to acquire a quantity of foreign currency at a price agreed upon at the end of the contract. If when the contract expires the agreed price is less than the market price, in that case it executes the contract or collects the difference, and if it were the other way around, obviously not.
What happens is that not only importers, exporters and debtors in foreign currency go to this futures market, but also those who make bets or investments in favor and/or against the peso, or the dollar. As in Argentina, in times of uncertainty and crisis, the ghost of the devaluation, there are logically not many bettors in favor of the peso. So, as another intervention tool to placate foreign exchange sentiment, the BCRA resorts to selling contracts future dollar.
So what does the BCRA: sell a number of contracts (the number of Dollars is standardized for each contract) at future prices that discourage devaluation expectations. Thus, it becomes practically the only supplier. In other words, the entire market bought dollars to futureto whom? to BCRA.
What happens next Wednesday? It’s the end of the month and August contracts expire. The latest official information revealed that the BCRA at the end of July it had sold more than US$7.1 billion of contracts for future dollar. It is estimated that the BCRA position did not change much. And of the total contracts in force, about 65 to 70% expire in August.
To put it in black and white. The market “bought her” Dollars at the end of August at a value of, for example, $140. For his part the dollar officer of the BCRA it’s at $136. So, if at the end of the month the official dollar of BCRA rises to $150, in that case it is to the buyers’ advantage to execute the contracts because they buy a dollar cheaper than the official price. And vice versa, if the dollar official instead of $150 were worth $135 at the end of August, no one would want to execute the contract, because it would imply buying something more expensive than it is worth.
So who would think that the BCRA it’s just going to devalue before the end of the month, that is, before next Thursday, when it has a mountain of contracts future dollar sold and if the official price rises (devalues) above that set in the contracts, it clearly loses.
Here is a clarification. In general, most futures contracts for dollar they are bets on one devaluation or not. So what really happens is a price compensation. That is, the BCRA it does not deliver foreign exchange but pays in pesos the difference between the official price and that of the futures contract. But imagine that difference multiplied by billions.
In case anyone at this point in the story did not realize, what is at stake is not the reserves, which are not available by themselves, but a strong issue of pesos. It would be insane if with such a stock of contracts future dollar sold the BCRA have a devaluationAt least until next Thursday.
In the market they believe that at the end of the month the current contracts will be renewed, that is, they will be extended with other maturities. If not, then, they will win and from next Thursday there will be one less obstacle on the horizon of the BCRA if they decide to adjust the official exchange rate.
It should be noted that it is undoubtedly a “number” US$7.1 billion sold in the future, much more than the US$5.7 billion during the 2020 crisis but still infinitely less than the US$17 billion that Vanoli management reported left in 2015.