The keys that that entity listed are the following:
1- Maximum political uncertainty and many unknowns. The available polls on voting intention show a drop in voting intention for the ruling party and a rebound in the opposition and third alternatives, suggesting that on Sunday the defeat that the ruling coalition experienced in the PASO could expand and increase the chances that the FDT lose the majority in the Senate.
According to ABECEB, in this context speculation arises about how the ruling party will react after Sunday: How weak will the President be? What will CFK’s attitude be, will he cooperate, confront or step aside? How will the pro-government deputies and senators behave in Congress? What position will traditional Peronism take? Will a cabinet refill be activated and with what bias?
“These are the questions that leave the economy without a fundamental anchor for expectations: the political anchor of anticipating the future course,” he said.
2- Exchange pressure to the top and agents (investors) covering themselves in the face of growing expectations of devaluation.
This context of extreme political uncertainty a few days before the legislative elections, and in an economy that drags large macroeconomic imbalances, is reflected in the foreign exchange / financial market.
The blue dollar exceeds $ 200 (with free CCL dollars close to $ 220), a very high and unsustainable exchange gap above 100%, investors moving to dollar link funds to hedge against a possible devaluation jump, companies rapidly paying off their hard currency loans ( Net loans fell -9.3% since the end of September and -3.9% only in 5 days of November).
And a BCRA intervening strongly in the spot (selling USD574 million between 11/28 and 11/04, a selling streak that would have extended in the last week) and in the futures (as inferred from the strong increase in the volumes traded).
For ABECEB, the BCRA arrives at the elections with net liquid reserves converging to zero.
He points out that “these numbers are not surprising, because the absence of a political anchor for expectations is compounded by the lack of a fiscal, monetary and exchange rate anchor (in a context in which it is expected that the Central will soon have to change the exchange rule that it has been applying to devalue below inflation) “.
And because the “electoral plan (silver plan in the pockets) and the fiscal seasonality typical of this time of year feed the exchange pressure: $ 500 billion have already been issued to fund the treasury from the PASO, the effective and expected inflation exceeds 50 % annually and we accumulate a real appreciation of the peso of 15% so far this year “.
3- Month-to-month inflation (which affects voters’ spirits) exhibits worse figures than the government aspired, despite freezes and controls.
It indicates that the inflation projections for the end of the year are constantly revised upwards and the entity estimates 50.4% for the year.
4- The positive side is an improvement in the health situation (77.5% of the population already vaccinated with one dose and 59% with two doses) and a greater economic movement (hand in hand with greater mobility and the recovery of the sector services), but it seems that this will have little flavor when it comes to tipping the balance at the polls.
“Not even the continuous upward revision of the GDP projection for 2021 (the rebound will probably exceed 8% this year) seems to be capitalized for the ruling party that goes to the legislatures with 40% poverty, a real salary that it does not achieve. to recover and, above all, an economy without a clear direction and that should prevent the open sources of instability from worsening, “the report indicates.