The Minister Luis Caputo Project a “reset” of exchange policy, dollar and rates of interest. In the last hours, he gave him date.
The Government bets on A triumph of freedom progresses (lla) consolidate your fiscal stability agenda and dissipates current financial tensions. However, the strategy has generated confusion among investors, with warnings of international banks, such as Morgan Stanleythat in the last hours pointed out the lack of clarity in the deadlines and the direction of the dollarrecommending caution until the expected exchange adjustment is completed.
Federico Furiasedirector of the Central Bank and key member of the economic team, said Wednesday on the social network X: “The rate rise is transient and mainly concentrated in the very short term rates. This movement will be corrected after the triumph of Lla in the mid -term elections. “That is, the change will come After the mid -term legislative elections of October 26.
This statement reflects the commitment of the ruling party for an electoral result that neutralizes the “kuka risk” – as President Javier Milei calls it – and allows make the exchange scheme more flexiblealigning the exchange rate with competitiveness objectives without unleashing inflationary pressures.
Higher rates, fall in fall and the strange phrase of Luis Caputo
The debt tender held on Wednesday brought surprise. While it was key to the government, since it managed to renew maturities for $ 7.7 billion, according to the Secretary of Finance, Pablo Quirnowhat must be highlighted is that it enhanced the rise in the financial cost: the expiration bonds on September 30 reached 75.7% rateswidely exceeding projected inflation and reflecting the market demand for higher yields.
As he could know Scopeto ensure the success of the operation, The government made direct calls to banksurging them to actively participate in the auction, a measure destined to absorb liquidity and contain the pressure on the dollar in a pre -election scenario. Although effective, this intervention generated criticism for its discretionary nature and the impact of high rates on the cost of financing for the private sector.
The image of the government faces an additional challenge after the scandal in the National Disability Agency (Andis) and financial tensions. According to a recent survey by the consultant Shila Vilker, Between August 22 and 26, 57.9% of those consulted responsible for the president Javier Milei In the case, while 59.3% points to their sister, Karina Milei. Besides, The presidential image fell to 39.8%below that of Axel Kicillof (43.8%) and Cristina Fernández de Kirchner (41.8%), which represents a significant setback in a critical electoral context. These data They complicate the expectations of a forceful triumph of Lla that, according to the government, is key to the economic “reset.
The data did not go unnoticed. In the last 48 hours, Meetings at the Treasury Palace with economists close to the government They put the focus on the system of exchange bands, which could be another pillar of the post -election “reset. As transcended and even statements after the meeting in posts and comments of market referents, the current band scheme “does not reflect the expectations of investors”, since both in the future dollar and in the implicit rates “higher values for the exchange rate” are observed. These discussions suggest that, after October, the government could – and even try to install – that would raise an adjustment in exchange bands to align them with market projections.
In that line, Luis Caputo himself reinforced this week – in different meetings – his intention to Dismissal responsibilities on high rates stating that this policy responds to “A direct decision of President Milei” and not to his strategic vision. The minister insisted that the rates, which in some instruments exceed 80%, are “endogenous” and are conditioned by the need to absorb liquidity and avoid a dump of the dollar in the pre -electoral context. However, he acknowledged that these measures could negatively impact the level of economic activity in the short term, although he expects an recomposition after the elections.
Daza looks at Caputo; Morgan Stanley looks at everyone
The internal tensions in the economic team They exacerbated with the statements of the Secretary of Economic Policy, José Luis Dazawho – in a virtual talk to faithful – attributed the difficulties in reducing the country risk to the errors of the stabilization program implemented during the presidency of Mauricio Macri, that is, A lifting shot to whom he was part of economic driving at that time, that is, Caputo itself. These statements, which resonated as an owl within the Ministry of Economy, expose frictions in the official narrative and contradictions within the team that operates on the fifth floor of the Treasury.
The macroeconomic context adds complexity to the stage. Morgan Stanley He warned this week that the government’s monetary and exchange strategy keeps investors “confused” due to the lack of clarity in the deadlines and contradictory signals on the direction of the dollar. The bank He recommended to his clients wait for changes in exchange policyin line with previous statements by JP Morgan. This warning underlines the perception that BCRA interventions and current high rates are temporary containment measures, but not sustainable in the long term.
The electoral calendar, confirmed by the National Electoral Justice, establishes that on October 26, 127 benches will be renewed in the Chamber of Deputies and 24 in the Senate, in a process that could redefine the balance of power in Congress. A triumph of Lla, according to the Government, would pave the way to deepen economic reforms, including a possible flexibility of the exchange rate within a broader band regime, as JP Morgan suggested in previous reports. However, Morgan Stanley warned that the lack of clarity in the transition to this new stage could maintain volatility in the market and affect investors’ confidence.
Source: Ambito
