The high inflation, which reached 115.6% in the last 12 months to June, the scant reserves of the central bank (BCRA), the strong fiscal deficit and the proximity of presidential elections create a complex climate for investors.
What do the gurus think about the agreement with the IMF?
“The negotiation between Argentina and the IMF It seems more complicated than expected. On the one hand, Argentina has little to offer, where (Economy Minister Sergio) Massa in his role as “candidate-minister” is not going to want to validate a leap in the exchange rate or a fiscal adjustment,” said Fundcorp’s Roberto Geretto.
He added that “on the side of the IMF, it is very difficult for them to advance funds since Argentina is on the way to failing to meet the main goals of the agreement. That said, both parties continue to have incentives to reach an agreement since a default would harm everyone, and the drought provides a reason to renegotiate, but the task is not easy.
“I see there is a complex negotiation. It is not that the Fund is asking for extraordinary things, but obviously there is a red line in the sand regarding how much can be spent by both parties,” Claudio Loser, a former director at the IMF, said in radio statements.
“There is a lot of illusion or fantasy on the Argentine side saying that the Fund does not want to help us or that the Fund is fully ready, or that if the Fund does not come, China it will help us. I think that’s the wrong grand illusion, because the Chinese certainly want to increase their power at the expense of the western empire. They are not going to lend Argentina money to pay the Fund when they are effectively the IMF number two“, he claimed.
“With few degrees of freedom (read liquid reserves close to zero and negative net of 7,000 million dollars), the Government and the IMF continue negotiating, trying to close a ‘waiver’ that unlocks the disbursement of US$4,000 million before the expiration of US$2,600 million on July 31,” said the consultancy EcoGo.
“Given the times of the board of directors, to avoid going into delays, the “political agreement” should be closed before next Friday,” he estimated.
Dollar and inflation: what is expected for the coming months
After the inflation data for June, “the second half of the year is dominated by the electoral scenario, which can make the exchange rate issue more complex and worsen inflation expectations in the event that some unexpected “noise” is generated,” said the ACM consultancy.
“The engines of inflation they are indoors. These are idiosyncratic issues, and they could become more complex over the long run into December,” GMA Capital said.
“There is a lot of concern, especially in exchange matter“, said Lorenzo Sigaut Gravina of the consultancy Equilibra and estimated that “December 10 can completely change economic policy and particularly the value of the dollar“.
“The data of inflation June (6% m/m) gave the government air on the inflation front, but the lack of progress with the IMF, the constant sale of reserves and the proximity of the PASO seem to have awakened the CCL (dollar in the alternative market) and to the ‘Blue’ (parallel dollar),” said Delphos Investment.
“He financial dollar (CCL) it should be around $550, the level we refer to as the “macro calm level”, which represents a period in Argentina when the BCRA accumulated reserves with constant trade surpluses (plus dollars) and the fiscal deficit was being approached (less pesos)”, estimated Javier Casabal of Adcap Grupo Financiero.
“If we assume that in the coming months politics (via elections) or the market They will make the adjustments so that they are corrected, even if it is part of the macro imbalances, the implicit values of the TCRM (multilateral real exchange rate) in the dual (bonds) do not reflect what will happen in the future and only show what happened,” Neix said. in a report.
“We maintain our assessment of the high chances of value recovery of local paper; however, it seems prudent to incorporate them in stages given the high uncertainty of the current process,” said VatNet Financial Research.
Source: Ambito
