Tuesday, December 7

Dollar: market sees correction in 2022 and measures the “bullets” of the BCRA

In the first week after the electoral contest, Pesce did not accelerate the rate of devaluation of the currency in the official price. That is one of the signs that the market has been following closely. The daily micro devaluations continue to give 1% on a monthly basis against the 3% inflation floor.

Miguel Kiguel, head of the consulting firm Econviews, He warned that now the BCRA will concentrate all its efforts on the exchange market. “There it is losing reserves practically every day. There is a clear threat that at some point it will run out of reserves and without them it will not have ‘fire power’ to be able to control or fix the exchange rate, and as (Martín) Guzmán repeatedly says, avoid devaluation “Kiguel warned. In that sense, he argued that “to avoid devaluation, you have to have and earn reserves.” “It is the most urgent problem because the government spent the whole week and did nothing. This inaction is difficult to understand in a situation that is becoming more and more dramatic, ”warned the former Finance Secretary.

In this sense, the consulting firm Invecq He stated that, given the current scenario, the agreement with the IMF “becomes a priority, as well as modifying the current exchange rate regime.” The consulting firm assures that “gradual devaluations and especially with current levels of credibility, have the disadvantage that it is more difficult to manage depreciation expectations and tend to be associated with periods of greater persistence of inflation.”

The idea of ​​gradual correction may clash with the expectations of the IMF when negotiating the agreement with the organism that leads Kristalina Georgieva. The entity’s economists consider that shock jumps can give a better result because they provide operators with the signal that once the economy has stabilized with the new relative price level, distrust decreases, inflation stabilizes and the rate of change calms down. Invecq maintains that “the advantage with which a discrete jump in the exchange rate runs is that if it is credible (something increasingly difficult), the market will expect this devaluation to be only one-time, and as high as the economy need it, and then recover the economy more quickly ”.

Faced with the context of uncertainty, the expectations of a devaluation are increasingly important in the medium and long term. On the other hand, the fact of not accelerating the devaluation in the first week gives the impression that the correction will arrive in 2022. The rates implicit in the future contracts in the short section of the curve fell compared to last week, indicating a lower expectation of correction in the coming months. But the long tranche did not change, which means that the perception of a change in the official exchange rate persists. According to estimates by the consulting firm Equilibra, based on data from the Rofex, for March of next year the implicit interest rate of the contracts is in the order of 55%, but for August it jumps to 80%. “The BCRA did not modify the exchange delay scheme: the official exchange rate slipped during the week to 1% per month, while prices climbed to the 3% average per month. But after tightening the limit on operations in the administered financial exchange rate, on Tuesday the BCRA did not intervene and the gap between financial dollars was reduced to less than 5% “, he pointed Balances.

On the other hand, operators are beginning to question how many bullets the Central has left to face the remainder of 2021. Last week, liquid reserves were one step away from drilling US $ 800 million, after having to sell so far this week. November about US $ 750 million, according to estimates by the Group for the Study of Economic and Social Reality (Geres). Net reserves were US $ 6.54 billion, including gold holdings (US $ 3.697 billion) and a balance of SDRs (drawing rights) sent this year by the IMF of US $ 2,033. millions. The Central Bank reported on Friday international reserves of US $ 42,273 million, but this includes deposits from savers and other assets that, in theory, the monetary authority cannot get hold of. The weakening of the level of reserves deepens even more if one takes into account that in December Argentina must make a payment of US $ 1.9 billion to the IMF.


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