The unexpected triumph of the candidate javier milei in the primary elections (PASO) to elect presidential candidates caused an economic and political shock that hit the financial market hard.
The Minister of Economy and presidential candidate for the ruling party, Sergio Massawill hold meetings in the United States this Tuesday with Anna Bjerde, managing director of operations of the World Bank, Ilan Goldfajn, president of the IDB and with Jay Shambaugh and Michael Kaplan, from the US Treasury.
On Wednesday, the official will meet with Brian Nichols, of the US President Joe Biden’s government for Latin American affairs and with the managing director of the International Monetary Fund (IMF), Kristalina Georgieva.
Massa seeks to close an agreement with the IMF, which would allow the country to obtain a disbursement of fresh money to give some calm to the markets.
Argentina reached an agreement with the credit agency in July to unlock disbursements for $7.5 billionsubject to board approval at the August 23 meeting.
Dollar: what do the markets expect for this week?
“The PASO (primaries) and the subsequent measures of the Government brought fstrong market volatility during the week (y) the IMF welcomed the measures and hinted that on August 23 the disbursement of 7,500 million DollarsDelphos Investment recalled.
“We expect greater volatility in the financial dollars and high demand for currency and inflation coverage“, he added.
“The official devaluation of the peso not only will it not be free, but the domino effect will probably be felt more quickly on other nominal variables. As has happened at other times in history, the ‘pass through’ (transfer to prices) would have a strong inflationary shockand, consequently, it would further erode the pocket of Argentines”, estimated GMA Capital.
“We understand that the exchange stocks was adjusted to the maximum expression in order to allow the monetary entity (BCRA) to comply with the accumulation of reserves requested by the IMF”, estimated the StoneX brokerage.
Devaluation: the impact for the Central Bank
“Beyond the fact that reserves are not recovered, the BCRA continues to add foreign currency to its post devaluation interventions Even as the consensus grows that the fixed exchange rate would quickly fade away from the inflation projections until the end of October, for which reason a new readjustment would be necessary again,” said economist Gustavo Ber.
“via devaluation the BCRA liquidated the (letters) Leliqs for 8,610 million dollars from one week to the next,” said analyst Salvador Vitelli, adding that the problem is that “after the devaluation, the annual nominal rate paid for them increased by 21 percentage points.”
“Today it is practically impossible to draw conclusions about what can happen in the future; the only certainty is that Argentina is on its way to going through some difficult months in which uncertainty will reignwith a fragile macro and a delicate social context,” said Invecq Economía.
“The measures look disjointed, very late and without a general scheme that contains them; therefore, their chances of success look doubtful. The financial consequences would be to stoke the volatility in the short term, although the best prospects in the medium term would continue,” said VatNet Financial Research.
“Before the lack of sources, It is intended to attract short-term speculative money in the desperate search for foreign exchange. However, the prominence of the political issue raises questions, as the bright alternative is a one-person show, and that person exhibits striking characteristics.”
“It is expected that IMF directory give the go-ahead for the technical agreement closed weeks ago and trigger the expected disbursement of $7.5 billion,” said Research for Traders.
Source: Ambito
