Miguel Pesce, president of the BCRA: “We had reserve levels lower than these and we were able to face the situation”

Miguel Pesce, president of the Central Bank.

The president of the Central Bank (BCRA), Miguel Pesce, referred to the daily sales of international reserves that the entity had to make and that cost more than USD 1,000 million since the end of July. The official said that the seasonal peak in energy demand at times of record international prices is what is behind this string of sales and that this process will moderate this month to return to normal in September. “We had reserve levels lower than this and we were able to deal with the situation. The same thing is going to happen in the coming months,” he said.

Yesterday, the BCRA had to sell USD 84 million of its reserves to supply the formal wholesale market in the face of a situation of insufficient supply to cover the demand for import payments and other transfers abroad. In the last nine rounds, the BCRA accumulated net sales of USD 1,139 million, in the longest negative streak in two years, when throughout 17 business rounds the Central shed USD 1,551 million between August 19 and September 11, 2020.

Asked about the causes of this negative streak, Pesce attributed it to a peak in energy demand and the delay in the sale of the soybean harvest due to exchange rate uncertainty.

“Fundamentally it is the energy issue that in the winter months has a very important weight. We are still in August with high levels of energy payments and we hope that this will subside next week. We are expecting a reduction of more than USD 600 million in energy payments in August (compared to July), which would allow us to improve the situation in the exchange balance. And there is also the situation of the delay in the liquidation of the soybean sector”, he explained.

“We are with a delay of the order of USD 2,000 to USD 2,500 million that we hope will be recomposed in the coming months,” he deepened.

Regarding whether the level of international reserves is sufficient to cover obligations abroad, Pesce tried to be calm.

“Since the second half of 2020, they have been saying that we are going to have difficulties paying our external obligations,” said the central banker.

“We had reserve levels lower than this and we were able to deal with the situation. The same thing is going to happen in the coming months,” she assured.

“The BCRA is transparent about its level of reserves. Not only do we have the internal auditing mechanisms but, as members of the IMF, the Fund also audits those numbers”, said Pesce.

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