According to a PXQ report, the government could relaunch a temporary decline of retentions, issue more foreign currency debt or even intervene in the market to sustain exchange stability.
The economic team has already internalized that the exchange rate will not go to the band’s floor and recalculated its strategy to buy reservations and remumding the economy. The calm dollar appears as the main electoral letter of President Javier Milei, but the second semester is challenging for the external sector. For the PXQ consultant “you have to spend the winter” and The government could relaunch a temporary decline of retentions, issue more debt in foreign currency or even intervene in the market to sustain exchange stability.
Although in June the oleaginous-cereal complex liquidated about US $ 190 million per day, 25% more than in May, the president’s prognosis was not fulfilled: The dollar did not reach $ 1,000 and even less reached the bottom of the bandthat if that were not enough 1% each month, as provided in the agreement with the International Monetary Fund.
Then the Central Bank did not go out to buy reservations in the market, as a consequence it failed to reduce the country’s risk floor that would allow the government to access large international financing volumes to clear the financial landscape and Nor managed to remain the economy so that the rates are kept up and threaten to slow the access to credit that promoted consumption
Recalculating
The calculations error forced the government to fly. From that, as marks a recent report by the PXQ consultant “The treasure will replace the BCRA in the purchase of reserves and surprisingly also in the issuance of pesos”. The analysis details that dollars will be purchased with market intervention on large blocks, debt issuance in exchange for reserves and privatization of public assets.
For the consultant of Emmanuel Álvarez Agis, the strategy that the Treasury includes reservations so that the weights leave the accumulated surplus and not of the monetary issuance could be understood, but The former Minister of Economy recalled that last April the BCRA transferred $ 11.7 billion as “profits” and thus extended the broad monetary base.
The work also highlights a positive fact: From the announcement of the new measures to accumulate reservations, an increase of US $ 2,800 million was recorded. Of which $ 2,000 million come from a repo with international banks, US $ 500 million for the reopening of Bonte 30 and novel data that the Treasury would have bought the remaining balance outside the market.
“You have to spend the winter”
The PXQ report argues that the demand for imports of goods and services, especially broadly issuing tourism, has been growing and thatn the third quarter is expected that the agricultural currency offer will begin to decreaseso the risk of an exchange rate will increase forward.
At the same time he warns that the legislative elections are approaching and Greater volatility in the exchange front could imply a risk for the anti -inflationary strategy of freedom progresseswhich in turn is its main electoral strategy. That is why he takes up the phrase of former Minister Álvaro Alsogaray and argues that the challenge will be “spending winter” without shocks in the dollar.
On this point, it details the tools to which the economic team could use:
- The extension of the temporary decline of the withholdings, although with the risk of resuming the dynamics of the dollar-soja, after a very important advance of reserves by the sector.
- Emissions in foreign currency of corporations and provinces.
- Income of non-resident currencies for portfolio investment.
In addition, he anticipates that if these factors were not enough, “The Government seems determined to intervene in the exchange market, directly by tightening the interest rate, and indirectly, through the sale of dollar futures.”.
Source: Ambito
