The Chronoscape of Non-interventionism

This month, the BCRA acknowledged that it sold nearly $2 billion in dollar futures in May.

Welcome Avatar! Officially, the BCRA would not intervene in the exchange rate as long as the rate moves within the upper or lower exchange bands, but the BCRA numbers for May showed a $2 billion USD short in dollar futures. Whenever this kind of interference rears its ugly head in Argentina in an attempt to dampen exchange rate volatility, it is time to start paying attention.

Instead of calling an apple and apple, it seems that the BCRA still hasn’t fully accepted the fact that manipulating a future’s price is the same thing as intervention, just at a later date.

The reasoning behind this is that a lower dollar rate crawling up to the month after the midterms (November) can shape people’s perception regarding the likely exchange rate after the midterm elections in October, and could potentially stem a flight to the dollar in the weeks before the elections “just to be safe”.

The daily BCRA reserves updates have said “Sin intervención” ever since the introduction of the currency bands — Source

Does this mean that the Milei team expects a flight to the dollar and potential devaluation right after the midterms? The market expects the dollar to continue trading within the range of the bands, but what is the expected exchange rate value by the elections and what is the projected value for the end of the year? Let’s find out.