Saturday, December 4

The Government maintains its strategy in the official dollar and limits more the financial one to take care of the reserves

After the elections, the announcement by Alberto Fernández that he will send to Congress a multi-year economic program with which he will face the last section of the negotiation with the IMF and the first signs on Monday, the devaluation pressure took a breather. The market had rushed before the 14-N the purchase of different exchange hedging instruments, in a bid for an abrupt acceleration in the rate of depreciation. Yesterday that demand eased and the financial prices “not intervened” fell (around 3% to just under $ 210), dollar linked bonds (around 2%) and the rates implicit in futures contracts (1,000 basis points on average ).

“The market arrived at the elections very bought in coverage, both MEP / CCL and the official exchange rate. Especially in the short tranches, covering a scenario of an uncontrolled devaluation or a regime change in the exchange market as soon as the elections passed and that was not seen in prices today. In fact, the BCRA slipped just a few cents on the spot dollar. Then, that urgent demand disappeared “, he pointed Nicolas Rivas, trader of BAVSA.

In that sense, the signal that the entity chaired by Miguel Pesce sent to the market was a slowdown in the rate of daily devaluation. Yesterday, it sold $ 35 million in the official market to validate a rise in the wholesale dollar of only 5 cents to $ 100.27, the lowest increase for a beginning of the week since October 2020.

Retouching the stocks

In return, the intervention that the Central had been making on a daily basis on financial dollars traded with bonds under local legislation, whose price was about $ 30 below the CCL “not intervened” (which is traded with shares or in bilateral operations), eased. after the latest regulations implemented and before the elections. This action has implied increasing pressure on reserves in recent weeks. “Today (yesterday) there was much less intervention in the MEP / CCL intervened, in fact they let it run from $ 184 to $ 188.80”, Rivas considered.

That led some operators to think that the new tactic would be to try to unify financial dollars to go towards a single MEP and a single CCL facing the agreement with the IMF. However, after the wheel, the CNV announced a new retouching of the stocks for these exchange operations made with bonds under local legislation, that is, the segment in which the BCRA intervenes (mainly with the AL30 title).

General resolution 911/21, which will be published today in the Official Gazette, maintains the maximum limit of these operations at 50,000 nominal weekly (about US $ 17,000) but established that, to account for that cap, the sales of those titles against dollars “can no longer be offset or netted with the purchases of these same assets with settlement in foreign currency.” As reported by the body chaired by Adrián Cosentino, the measure seeks to “reduce the volatility of financial variables and contain the impact of fluctuations in financial flows on the real economy, within the framework of current economic policy.”

Specifically, the objective is to reduce the amount with which the Central intervenes at the end of each round to contain the gap, which last week was around US $ 30 million a day. “Many bought at the beginning of the round and then sold to the BCRA on closing, and that made them put in a lot of dollars. I estimate that they will seek to reduce the volume of intervention, ”said Rivas. In this way, they aim to preserve the scarce reserves to sustain the policy of administration of the official exchange rate.

Crawling peg

As for the official market, in different offices of the economic cabinet they affirm that the crawling peg (managed depreciation) is sustained according to the strategy to moderate inflation and the budgeted guidelines. And that in the negotiations with the IMF the exchange rate scheme is not under discussion. They also assure that a split was not discussed within the Government and that the versions that circulated in this regard were part of the pre-election noise.

Officials maintain that the market is pressing to consolidate profits due to its bets on a devaluation that the Government is not willing to carry out because a jump in the exchange rate would feed back inflation, block economic recovery and further exacerbate the social situation. And they consider that, although they are scarce, today there are more liquid dollars than there were last year, when an exchange rate jump was also avoided. Meanwhile, those who paid off pesos last week in anticipation of a rapid devaluation did not do a good deal.

In that sense, BCRA sources told Ámbito that, given these movements, the entity intervened in the Ledes market “To guarantee the performance of the instruments in line with the policy of harmonization of rates”. During the past week, including Friday, he bought bills at a nominal rate of between 45% and 50% to avoid further depreciation of the security’s value. Yesterday, with the recovery of the value of the LEDs, it sold at 34% to avoid a fall in the short-term interest rate.

However, doubts persist in the market about the continuity of the exchange rate scheme. Despite today’s respite, Rivas stated that the dollar “is going to continue under pressure” although he predicted that “it may have a changüí for a few weeks until what could be a change in exchange rate policy on the eve of an agreement with the IMF” .

For its part, Alfredo Schclarek Curutchet, An economist and researcher associated with the consulting firm Equilibra, he considered that the market reaction had to do with the announcement of the President and “the ratification of Guzmán.” “That lowers the probability that there will be a discrete exchange rate jump and is what is behind the sharp decline in futures. He said publicly that a devaluation jump is not going to happen and there are enough dollars not to have to. There are no excess reserves but they allow us to continue managing the official dollar. As it is not behind, if there is a jump, inflation would rise a lot. But there is no margin to continue delaying much more, “he said.

In this framework, the analyst expects that over time the BCRA will slightly accelerate the rate of crawling peg, which today runs at 1% per month against a price increase that exceeds 3%. For now, if the Government maintains the budgeted path this year, the official exchange rate will close at a monthly average of $ 102.40 in December. For 2022, the project that will begin to be discussed in Congress stipulates a 28% increase to end at $ 131.10, below the 33% inflation that the same text provides and much further than that anticipated by the market.

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