The president of the Central Bank, Miguel Pesce, affirmed that the intervention of the entity, as a lender of last resort, “recomposed the curve” of the fall in public securities in pesos, and predicted that “next week it will be normalizing” .
“The drop in titles in pesos last week served to highlight The role of the Central Bank as lender of last resortintervening in the market and recomposing the curve,” Pesce told FM Radio Con Vos.
“The Central Bank is going to defend the price of securities in the market. When we saw the fall in prices of the bonds that generated rates that are not those of the policy carried out by the Government, the Central intervened in the market”, he pointed out.
In this regard, he added that the Central “yesterday did not intervene”, while hoping that the debt market in pesos is “normalized next week.”
As for the capital marketsaid that the Leliq’s of the Central Bank are the savings of Argentine companies and families, and added: “We need to develop the savings market in a country that needs investment and credit. We need to develop the local capital market. If people had financial assets in which trust, dollarization would be lower”.
Regarding the rate hike from 48% to 53% driven by the entity’s board, indicated that the commitment assumed “since January 2020 is the search for rates that are real in terms of inflation.”
Refering to participation of the private sector in the credit market, admitted that “it is a problem” based on the fact that “it hardly reaches 8%”.
“Without a doubt, productive credit is a problem and we also need to develop the capital market, which is surely one of our great challenges,” Pesce explained.
The head of the BCRA also referred to the inflation problem, that in his opinion the process of “deceleration will continue, which will allow rates to be reached that are within a normal range.”
The rate hike announced yesterday search encourage savings in pesos and reduce inflationary pressures, while encouraging banks to place part of their liquidity in Treasury securities to seek yield.
In this way, people who make placements to fixed term 30 days by amounts up to $10 million will have a new interest floor of 53% TNA (+5 percentage points), which is equivalent tona Effective Annual Rate (TEA) of 68%.
This means that if a person deposits $100,000 at a 30-day fixed term, they will receive $104,416 at maturity, but if they reinvest that money in a new 30-day fixed term and repeat that investment every month for a year, at the end of that time he will receive $168,000.
Time deposits of more than $10 million will have a guaranteed minimum rate of 50% TNA (+4 percentage points) and 63.21% TEA.
On import administrationthe head of the BCRA pointed out that “there are speculative maneuvers that feed the exchange rate gap and some import more than they need” and added that “controls must be made on that”.
“Argentina is rapidly increasing its exports, there is a future in which the external restriction that has always conditioned our future will be relaxed,” Pesce pointed out.
“International volatility is increasing the cost of our imports,” he added.
As for the exchange market, explained that financial dollars are very small markets and the illegal dollar too.
“They are speculative and small markets where small movements in demand and supply can move prices strongly,” said Pesce.
About the complaint opposition operationsthe president of the Central Bank assured that there were rumors that opposition economists recommended restructuring the debt if they reached the government.
