The rates policy is a key component in the monetary strategy of central bankss and also an element that closely follows the saver who bets on fixed term when it offers interesting performance. It is a central variable for control inflation and the price of parallel dollars. The Government of Javier Milei decided to leave it unchanged for the moment, but the exchange rate dynamics could mean that it will soon have to make decisions in this regard. In this note, several analysts propose What strategies could they follow? in the short and long term.
First of all, as recalled Ambit from the consulting firm EcoGo economist Sebastián Menescaldand, this week, the Central lowered the rate of the Passive Repos of 126% (Annual Nominal, TNA), to 100% TNA, while that of the 28-day Liquidity Letters (Leliqs) left it stable at 133% TNA, with a monthly return of 11%.
The rate cut in the Passive Repos had a direct effect on the yields of the Common Investment Funds (FCI) Money Market, which They began to perform around 85% annually, which is less than 8% monthly, facing inflation that is currently running at 8% weekly.
“With this strategy, What they are doing is preparing the ground for the next Treasury tender, which will be held this Wednesday, but the basket will be presented this Monday,” he points out. And it does not rule out that they offer a performance of around 15% monthly rate for Economics instruments. Thus, he explains that “what they are looking for is for the pesos to be placed in T + 1 and in Treasury bonds.”
Rates: the BCRA’s short-term strategy
This is, according to the Ecolatina economist Santiago Manoukian, of a strategy that seeks “liquefy the stock of liabilities monetary with a rate that is going to be negative in real terms for those instruments.”
Manoukian agrees with Menescaldi that The BCRA and the Economy are trying to get the banks to return to the Leliqs and leave the repos, although they also seek “for part of the remunerated liabilities to migrate to treasury debt.” And he anticipates that this occurs in a context in which the Government seems to be going “to seek to improve market expectations anchored in a brake on issuance.”
This, Ecolatina explains in a report, occurs in a context in which the incoming Government has ruled out a disarmament of shock of the exchange rate considering it a path towards hyperinflation. “The first signs from the economic team point in the direction of a more gradual solution (pointing to a recovery in money demand in the medium term) what of shock to the problem of paid liabilities”, they detail.
And they advance that “what remains to be seen is whether the Government would complement this search to recover placements in Leliqs (with a longer term and profitability than the Passes) with a migration towards Treasury debt placements to clean up the BCRA balance sheet.”
In fact, in the last Leliq tender the BCRA not only renewed 100% of the maturities, but also awarded only 20% of the banks’ demand, which could imply that they are looking for redirect said liquidity towards the Ledes that will be offered in the next Treasury tender.
In this context, they expect, in the coming months, a reduction in real terms of remunerated liabilities given the strong inflationary acceleration resulting from inertia, official devaluation and the adjustment of relative prices.
In sum, they indicate that the official strategy It seems to appeal to a combination of:
- Reduce emission sources by cutting direct and indirect monetary financing of the fiscal deficit;
- A negative interest rate of the BCRA that would allow the stock of paid liabilities to be “liquefied”
- The possibility of migrate the stocks of pesos towards Treasury debt instruments.
Fixed term rate and Leliqs: what is coming in the long term
That is the strategy that economists detect for the short term. And, as Martín Kalos, director of Epyca Consultores, believes, “the new Government ended up being more pragmatic than it said it was going to be, at least for the moment, and what it is looking for is liquefy liabilities this summer”.
Let us remember that the main anchor of the new government’s economic program is fiscal. As anticipated, the cut they plan to make would reach 5.1 points of the Gross Product (GDP). However the strong exchange rate jump applied initially (which was 118% with a peso devaluation of 54%) with a crawlig-peg of 2% monthly, points to a combination of fiscal matters with the price of the dollar. And they made the dollar overreact to offer a more competitive exchange rate.
As explained to Ambit Fabio Rodríguez, economist and director of MyR Consultoresthe new Government is betting on “a high exchange rate without exchange rate unification for the moment, but which it hopes to apply later, and with a lower gap,” summarizes the economist and director of MyR Consultores, Fabio Rodríguez, in dialogue with this medium.
The unknown for the BCRA and the market
But, from the consultancy Balancewarn that “the million dollar question is how much and how quickly the external competitiveness gained after the devaluation will be eroded”. They trust that the BCRA will try to avoid a new exchange rate jump in the summer, but then, when the rate of slide of the official dollar approaches the interest rate, what will it do?
Moving forward, “once they start a stabilization planif that is the goal behind the orthodox adjustment,” Kalos hopes that they will try to maintain the positive fixed term rate with respect to devaluation.
Menescaldi points out in the same sense, who points out that, once the rate policy stage focused on the short term is over, “if we manage to sweep away the surplus of pesos As they propose to do, we are going to begin to have a market and we are going to see, perhaps a rate release.”
That is to say, that the BCRA could soon enable banks to compete by rate for the offer of fixed-term placements for its clients. But Menescaldi believes that “that could come later, at least in three months.”
Source: Ambito
