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The government should close the financial program which has eased by the return to the public system of pensions and allowances and exchanges idea Guaranteed Loans (PG), but still needs U.S. $ 6,000 million paid to meet foreign currency obligations. This possibility of BCRA’s international reserves at a time when international financial markets are agitated at high risk for the stability of Argentina’s economy. Is that while the BCRA has a good level of international reserves to discourage any possibility of speculative attack (on January 23 amounted to U.S. $ 47,026 million), reducing them in the necessary level government could increase the fear of the market leading to increased demand for dollars so bring the level of reserves at a level of risk to exchange rate stability. Faced with this possibility, the BCRA would have two opposite paths, each with a different risk. The first way would be to generate an appreciation in the nominal exchange rate so as to discourage the demand for dollars. This option would resign by the Central Bank reserves initially to appreciate the exchange rate kept hoping that it controlled the demand for dollars, thereby reducing the net loss reserves.

The second path that could take the BCRA would stop depreciating the nominal exchange rate so it reaches a level that reduces the monetary authority’s efforts to keep it at that value. This alternative, however, could increase the incentive of market pressure on the exchange rate so as to increase the depreciation of the peso necessitating greater effort by the BCRA to sustain the new level exchange. In summary accounts, weak fiscal and external pillars in Argentina’s economy will produce a significant increase in the fragility of it. Argentina’s economy in general and the Central Bank in particular, face an environment of greater volatility that involve risks not less on stability. The government has few resources to sustain economic stability than starting to twist the direction of economic policy towards the strengthening of macroeconomic variables and forceful sending clear signals to the market will move towards a more serious and predictable. This would help to build trust, a well more than necessary for these moments. Latinforme.com is the main source of financial information and independent opinion on American and global markets from a Latin American perspective. From our offices in Buenos Aires, Argentina, I approached the latest news and alerts to help you make gains regardless of the direction taken by the market.

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