After the change control the controversy grows: why does the Central keep the rate at 85%?

With the sole objective of avoiding another jump in the exchange rate, The Central Bank made the decision to maintain the reference rate of the Leliq by clouds, that is, at the current levels of 85.7%. But the big question that investors are asking these days is whether it really makes sense to pay such returns when at the same time the exchange control rules, which basically prohibits companies from using pesos to treasure dollars.

"If you had to put controls to buy dollars, at least give relief to SMEs and take the opportunity to lower rates"he told Infobae the owner of a stock market. This is the comment that is heard repeatedly in the financial market these days. The majority considers that the head of the Central, Guido Sandleris, is overacting with performance that exceeds expected inflation by at least 30 points.

Yesterday Mauricio Macri acknowledged before the businessmen called by AEA that the objective of the measures adopted at this stage is to prevent the rise in the dollar from accelerating. Clearly the exchange controls pointed to that direction. But rates at stratospheric levels could be indicated that it was not enough to leave companies that demand foreign exchange for the purpose of hoarding outside the exchange market.

On the other hand, inflation expectations are also increasing after the last devaluation. The survey conducted by the BCRA among analysts through the Market Expectations Survey (REM) showed that inflation this year is expected to jump to 55%. This would justify higher peso rates to beat the price increase, but they still look like exaggerated returns.

In the face of new increases in the Leliq, most banks also increased the rate paid to savers. The Nation, for example, raised it to 62% and most are already paying levels close to 60%. There comes in to play another factor. It is estimated that the level of hoarding of individuals exceeds USD 1 billion per month, taking into account the restriction of $ 10,000 per month per person. To try to reduce that dollarization amount or at least not increase, the only option would be to pay them with increasingly higher rates.

Miguel Zielonka, Econviews economist, noted that "The 85% rate was for banks to pay savers better and slow down the dollarization of portfolios. In the current context, paying that performance for the Leliq makes no sense. ". In the same vein, he pointed out that "the hoarding will necessarily be less now and in addition the supply of exporters will enter. There the Central will run from the intervention." Yesterday the BCRA intervened again to avoid any movement of the dollar, which remains at $ 56 levels in the wholesale market.

It is estimated that exporters should enter the market around USD 10 billion for the dollars they held in foreign accounts. The decree that establishes the exchange controls gave him 5 business days to do so, although for now there is no notice of a massive arrival of currencies, much less.

The decision of the banks to rescue Leliq to ensure liquidity meant that the monetary goal moved away from the objective stipulated with the IMF. Sandleris himself acknowledged that the situation will be discussed with the international organization, because the objective of "zero growth" of the monetary base for the quarterly target stipulated for September will not be met.