Government and market sources consulted by this newspaper agreed that much of this upward pressure, which widens the gap and encourages expectations of devaluation at critical times of the negotiations with the IMF, it was due to a dollarization of large Wall Street funds that still have significant holdings of assets in pesos in their portfolios. What is striking is the timing of the operations, which strain the financial situation while the program that will condition Argentina’s economic policy for the next five years is being negotiated. All this at a time when the Central Bank has to sell part of its scarce reserves to try to sustain its foreign exchange strategy in the official market.
A financial operator told Ámbito that in the last rounds there were large sales of titles in pesos, fundamentally some tied to inflation, which ended up in the cable dollar. In particular, he pointed to the Templeton fund, one of the heavyweights of the global markets, who would have liquidated part of his holdings in CER titles. Another financier agreed that the movements that occurred in the TX22 bond, of which the Californian fund owned a significant sum, pays that version.
Ámbito tried to communicate with sources close to the company but did not obtain results. In any case, regardless of the fund in question, in the local market they agree that the operations arranged in recent days correspond to foreign actors.
In two different offices of the economic team consulted by this means they also suspect that foreign funds were the ones that moved the CCL. An official source recalled that these players are natural claimants of that market and that, due to their size, they can cause price volatility. “These last few days were a bit complex,” he said. In another dependency, they pointed out that the flows of titles in pesos in recent days, particularly those of CER instruments maturing in March and July 2022, are those that are usually seen when non-residents disarm positions.
According to estimates by Facimex Valores, until recently foreign funds held some $83.2 billion in local currency securities maturing in March, $40.2 billion in April and $30.3 billion in July. The presumption is that a part was sold to be dollarized and exit via CCL. “It is quite likely that the pressure will come from the side of the funds that are leaving the country,” said one of the sources.
From the beginning of the administration, both Martín Guzmán and Miguel Pesce and other officials pointed to these actors as one of the main sources of tension over the exchange rate gap. These are investors who entered during the macrismo to carry trade (the famous financial bicycle), but who later remained “trapped in pesos” due to the “reprofiling” and the stocks applied by the Cambiemos administration in the middle of the 2019 bullfight. The two main foreign holders of assets in local currency are the large funds Templeton and PIMCO, although there are others of smaller size.
The truth is that most of its holdings have already fled during these two years in a practically incessant trickle via CCL. Also by alternative means, such as the bond auctions in dollars for US$1.5 billion that Economy carried out at the end of 2020 to give them an outlet and stop the run that was taking place in those days. According to calculations by the consulting firm 1816, in December 2019, foreign funds held titles in pesos for the equivalent of US$9.5 billion measured at the cash value with liquidity, and in September 2021 they had about US$2 billion left. In the Palacio de Hacienda they considered weeks ago that the number of assets in pesos that were still in the hands of non-residents was around US$5.5 billion.
All in all, the type of actors that are leading this wave of dollarization leads some officials to think that, more than usual precautionary movements by investors, it could be pressure for the closing of the negotiation with the IMF to refinance the US$45 .000 million debt contracted by Mauricio Macri. The interest of the creditors is to recover part of the losses they recorded after the swap, with a program that guarantees the availability of foreign currency to guarantee the payment of future maturities. A program closer to the adjustment required by the Fund.
In the same sense, they located the run against bonds in Argentine dollars on Wall Street, which recorded large falls in the last rounds and caused the country risk to shoot up 12.3% so far in January to 1,906 basis points. At the same time, investors are seeking refuge from the last-minute tensions in the negotiation and aim to hedge against the possibility of a default, which seems to be moving away.