Analysts weigh in on the country’s economic future at a time of crisis financial turbulence and negative reserves. The Government of Javier Milei recently began a zero emission program, Meanwhile he Central Bank relaxed regulations for payment of imports and export liquidations and eliminated exchange barriers on the way to a liberalization of the exchange market. In this context, the market does not rule out a rate hike.
“The new scheme (where the peso will be the “scarce currency”) is something new and raises a question about where the real rate should be in the long term“said the clearing and settlement agent Neix in a report.
“In recent monetary history, when attempts were also made to control the monetary base, the short-term rate was endogenously established and long-term rates found a limit associated with an expectation of lower inflation and economic growth,” he recalled.
The focus remains on reserves
“Although the reserves are in a critical zone, which causes falls in public securities, A successful money laundering could be the tool the executive needs to change expectations and be the necessary bridge until the next grain harvest,” he said. Joaquin Marquez, economist at UG Securities.
The Economist Gustavo Ber He pointed out that “the dynamics of reserves and their outlook for the future still raise concerns in view of the growing payments to importers and the seasonally lower supply of foreign currency, which is projected to accentuate the “negative balance in net terms”.
“Given this situation, and with interventions that have disappeared in the last few rounds, it is that Financial dollars are calmer, with a (currency) ‘gap’ stabilised at around 40%“, he added.
The key for bonds in the coming months
“The market would be waiting for eventual international supportbut we understand that they would be complementary to a recurring surplus reflected in local reserves,” he said. VatNet Financial Research.
For Delphos Investment“Argentina’s bond parities are around 45%, while those of Sri Lanka, which is in default, are 57%. It is clear that Argentina’s numbers are not far from those of Sri Lanka, which, as friendly as it may be, has already declared default. Therefore, when trading at lower parities, it could be said that Argentina is experiencing distress prices“.
“Considering today’s prices, it is clear that the market discounts a pessimistic scenario“However, the IMF’s projections reflect a more encouraging scenario,” he said.
Inflation and wages
The Economist Ricardo Delgado He said that “the Government is taking the largest amount of pesos from the market, which does not have enough dollars to be able to escape the trapremoving all these obstacles, consequently, it seems to me that we are going to an economy that will clearly have fewer pesos in circulation in the coming months and that there will not be enough dollars.”
“High-frequency data and market behavior seem to suggest that Inflation would be breaking through the 4% monthly floor. This would be excellent news in every sense: for the recovery of real wages, to reduce the exchange rate appreciation and help the purchase of reserves,” he estimated. Roberto Geretto, from Fundcorp“Wages appear to have recovered against inflation in the last two months,” the report said. ACM consultancy.
“It `s difficult anticipate an immediate recovery of incomeare likely to continue under this same trend, in parallel with certain factors such as tariffs and some missing relative price correction that will put pressure on inflation, so the recovery of wages will result in an improvement at the margin in the coming months,” he concluded.
Source: Ambito
