This situation not only frightened international investors, who were the first undo their positions in the country, but also to the small local savers. So that international investors have been fleeing the country, while the local savers, with very fresh memories of the last crisis, they sought refuge in the US currency very even though the combination of almost pegging with weight and a greater than 20% inflation rate is generating them a negative performance. And here comes the issue of international reserves of the BCRA and why my response to this friend of mine. While many market analysts criticized harshly the BCRA by its policy of reserve accumulation, the owner, Martin Redrado, justified this objective in the need for a phrase that he repeated until when he talked about sleeping with an anti-crisis fund, in the absence of an international lender. Logically that argument wasn’t very valid for the market in a context where the main concern of Argentines was the inflationary issue, at the time that it was almost an international crisis of this magnitude.
But since the beginning of 2007 with the turbulence in the Chinese stock market, the market has been tested to the Argentina. And the country has been able to overcome without greater difficulties each test that has had to face. The BCRA is resisting the onslaught of the market. This has had to resign part of reservations (more than US $1.5 billion in recent weeks). I have no doubt that the Monetary Authority will be able to pass this test without drawbacks. Firepower has (slightly less than $49,000 million).
But further than that there is a threat in the short term, this situation should call the reflection to the Government. If not for the level of reserves that owns the BCRA, the situation today would be totally different. Perhaps, before a strong increase of the exchange rate of the dollar, the financial system would have received an attack that would have taken him to the brink of collapse. We must not forget that the common people still keeps the fears of the 2001.Lo that is occurring in the system financial market and Argentine exchange rate are warning signs does the Government will be observing them?