He dollar experienced a sharp decline in recent weeks, driven by a higher-than-expected inflow of foreign currency within the framework of money laundering that the Government activated. Will the exchange calm last longer? Some analysts in the city of Buenos Aires believe that the carry trade is coming to an end, and they recommend other investments.
The question is whether there is room for the prices of blue, CCL and MEP to continue declining, or if they found a floor. The blue dollar is trading at $1,180, the MEP at $1,135 and the cash with liquid (CCL) at $1,177.
One of the reasons that experts give when projecting that there is still room for prices to fall is the ability of the Central Bank to prevent prices from skyrocketing. The monetary authority has already purchased more than US$600 million so far in October, and everything indicates that it will be able to continue adding foreign currency. Purchases are sustained because the liquidation of the field is at high levels.
According to a report by the consulting firm Fernando Marull y Asociados, to project a declining dollar, the improvement in dollar credits and ON emissions (close to US$2,000 million in 3 months) is added, and the fact that there is not a big jump in import payments.
The laundering effect on the dollar and the BCRA reserves
He bleach It is turning out to be more successful than expected, and they brought in US$13,000 million and in October, US$697 million came out of that amount. It explains the exchange rate summer and the Government hopes that most of these funds could remain within the system.
If this is true, part of the laundering dollars will increase the reserves of the Central Bank, which expands the firepower and distances the idea that there could be a jump in the official exchange rate.
Also contributing to maintaining exchange calm is the prevailing view in the market that the Government is beginning to clear up the doubts that persisted about the payment of debt maturities in 2025.
The good news of International Monetary Fund (IMF) Announcing a reduction in surcharges that allows relief of US$3.2 billion for Argentina crowned a positive week for the Government and encourages the idea that financial conditions are improving.
Analyst recommendations for investing today
Analysts estimate that dollars will find a floor in a range of $1,080 to $1,150. According to a report by Adcap Grupo Financiero, The dollar may continue to fall, especially in this period of Central Bank purchases.
For its part, for Portfolio Personal Inversiones one of the keys will be what happens with the so-called “carry trade”for which dollars are sold to convert to pesos, benefit from the rate and then return to buy more dollars than at the beginning.
A key fact is that the CCL – the dollar used by companies – is at the lowest level since the run-up to PASO 2019.
“In terms of strategy, the strong appreciation of the peso makes carry positions more risky, although these could give profits for additional time if the government remains firm in containing the gap. Meanwhile, the country risk pierced the lows of April-24, and we highlight options in Globals. In equity, we see value in selective strategies”Juan Manuel Franco, chief economist at SBS, said in a report.
investments finance markets stocks bonds vivo.jpg
Depositphotos
Likewise, he adds: “In terms of strategy, the context continues to be given by a significant appreciation of the RER, in a context in which there are factors that contain disinflation (…) The government’s determination to contain the exchange rate gap made positions attractive. of carry trade, even in a framework in which the RRNN remains negative Now, with a deepening in the appreciation of the RER, we see value in closing at least part of the carry position although we recognize that the government seems to strongly aim to contain the gap. and that carry positions could be profitable for an additional time.”
“That said, we emphasize that the external accounts are the government’s main challenge and that the exchange market must eventually normalize, something that would initially have an impact on inflation, which, together with relative prices that still have some adjustment , leads us to continue seeing value in CER in the medium term, with our favorite tranche being 2026, with value also in 2025 bonds such as T2X5 and TZXM5, which allow closing positive real rates without the nominal risk to which one is exposed in Lecaps. “We see value in these positions even recognizing that CER is an asset class without much momentum lately.”
Regarding the debt in dollarSBS highlights that “the Global rally continues its course” while the country risk decreases. “We maintain a preference for GD41 and GD35 over the short section of the Globales curve, given that they would protect better in an adverse scenario, while also maintaining interesting returns in the optimistic scenario. Meanwhile, we once again point out that at these legislation spread levels We see value in moving from AL to GD,” he says.
Regarding equities, SBS sees value in specific papers in the energy sector (VIST, YPF, PAM) and utilities (TGS, TGN, EDN, METR), highlighting the value of very selective equity strategies at this level of Merval.
investments markets finance live stocks bonds
Depositphotos
From IEB, its weekly report indicates: “Although during October the money laundering flows may continue to favor the appreciation of the peso, we see it advisable to gradually reduce the exposure to assets in pesos. With this compression of bills and CERs by 11% of IRR may once again have some attractiveness at these levels assuming that inflation finds a floor at 3% during the coming months”.
Regarding debt in dollars, he states: “Although we believe that the rally can continue, we consider it advisable to rotate some of the portfolio towards corporate and bopreal bonds. Currently with the exchange rate at 3.5%, the highest in the last three months, it is a good alternative to take exposure to long MEP local ONs with good credit. Alternatively, the IEB Strategic fund (MEP) that invests in local ONs looks like another good option. It currently yields 7.1% with a duration of 14.8 months. The exchange seems to have responded to the money laundering flows and the intervention of the BCRA, which focuses on the MEP. Among the bopreales, we continue to like Series 1A.”
“On the other hand, although the longest sovereign bonds were the ones that experienced the greatest rise since August, they are still the ones that continue to have a greater potential upside in the face of a normalization of the curve. The short ones allow for more accelerated collection given the fund flow structure that amortizes 8 USD per 100 of VNO at each maturity, although the upside in relation to the longs is lower,” he concludes.
Source: Ambito
