The Government paid a commitment of US$2.700 million to the credit agency through the use of Special Drawing Rights (DEG) and yuan to avoid further hitting the dollar reserves of the central bank (BCRA), those that fell to levels of March 2016.
Adding to the economic complexity are the presidential elections given the uncertainty of their result, where the ruling party chose Economy Minister Sergio Massa as a pre-candidate for the August primaries (PASO).
Massa: minister and candidate
“With the candidates settling in the cat flaps to launch themselves into the presidential race, it is convenient to pay attention, more than to the promises, to the diagnosis that they make explicit about the causes of the twelve years of stagflation. It will be difficult to give the benefit of the doubt to those who insist with objectives and tools exhausted throughout this period,” said the Mediterranean Foundation.
“Unlike recent campaigns, the crisis is an evidence, not a threat or an ‘asymptomatic’ disease. On the horizon, a way out of stagflation is somewhat feasible, but a plan with the proper sequence of goals, instruments, and reforms will be needed. Also consistent criteria when facing dilemmas due to measures with conflicting effects,” he added.
“The Peronists’ decision to unite behind Economy Minister Sergio Massa as their presidential candidate has reduced the risk of a left-wing agitator running the country,” said consultancy Capital Economics. “But while the news has encouraged investors, Massa’s record as economy minister is not cause for joy“, he claimed.
Massa’s confirmation as presidential candidate “continues to have significant repercussions on financial assets. Financial dollars are no exception, which have lost ground in recent days, confirming that the outlook remains favorable for the so-called ‘carry trade'” Delphos Investment said.
Markets: what June left us
“The local market closed June immersed in pre-election volatility, because the lists of candidates to be presented in the next PASO were defined. In this way, the assets that make up the leading panel S&P Merval, although they suffered corrections to Throughout the month they end up,” said Priscila Bruno from Rava Bursátil.
He noted that “among the most important news, Argentina made a payment of US$2.700 million to the IMF and the economic team travels to the United States, which leads fixed income to continue on the upward path.”
“Dollar-denominated bonds ended (June) with strong rises in pesos and also in parities, throughout the entire yield curve, with rises that averaged almost 40%. CER-adjusted (inflation)-adjusted peso securities once again improving thanks to to the inflation data and long Duals end with increases of up to more than 13%”, summarized the Tavelli y Compañía brokerage.
“The macro dynamics go one way and the financial market dynamics are showing opposite things. We are seeing a macro deterioration, which is neither new nor suspicious, everyone is warning about it, especially given the consequences that the drought had on the economy, and on the other hand, we all expect it to continue to deteriorate. The first feature is the contrast between the macro and the financial”affirmed José Echagüe of Consultatio.
“The second plane, which I think is the most important, is what is driving the rise in stock and bond prices (…) and the drop in the exchange rate. I think the prevailing interpretation is that from from the nomination of Sergio Massa as a candidate an electoral menu is generated that we do not know what its final form will be, but that the alternatives that it contemplates are all ‘market friendly'”, he said.
“While we believe that in the short term the election of Massa brings calm to the market because of his relationship with the IMF and because it potentially ensures a slightly more orderly transition, For whoever governs in the next term, there will be a block of deputies and senators from the hard core of ‘Kirchnerism’ ready to oppose any reform or attempt at change that whoever is elected may attempt,” said Investing in the Stock Market.
“In front of the IMF this also results in positive news, the Fund feels relatively comfortable with Massa as the interlocutor of a government in which he could not find someone with the political support and the strategy to coordinate policies,” he added.
dollar and reserves
“It is clear that the central bank is running on a very narrow path and has the inability to generate dollars in the future and that what assures us is that we will have exchange rate tension if there are no fresh dollars in recent months,” said economist Martín Redrado.
“The only possibility is what is being negotiated with the IMF, perhaps a ‘soybean dollar 4’ (special exchange rate for agro-exports) can be generated, but these patches are enough to be able to reach PASO first and then until December (presidential inauguration),” he said.
Source: Ambito
