The first came this Tuesday with the announcement by the monetary regulator that the “crawling peg” will go from 2% to 1% monthly in February and the second one is a little slowersince the intervention of the current administration in the exchange rate is as obvious as the previous one and this generates concern in the market, which sees that, if the stocks are not released in April or May with the entry of the thick harvest, there will be restrictions (traps) for a whilewhich would leave the Government in breach of one of its greatest campaign promises.
The effectiveness of these measures, however, depends on multiple factors that go beyond the technical adjustments that the economic team can make, since, in the Argentine economic context, assuming that key variables will remain unchanged is an approach that underestimates the intrinsic volatility of the local market– Currency fluctuations, inflationary expectations and political tensions are dynamic forces that constantly challenge economic policymaking and financial planning.
The measure under the scrutiny of analysts
As the investment advisor explains well, Gaston Lentiniin statements to Scope, The lowering of the “crawling peg” is intended to fulfill the “job description” of President Javier Milei, whose first point is to lower inflation and, “from that point, we have to understand the decision.”
The strategist confirms that the measure gives rise toif the devaluation is less than inflation, what is convenient for the investor is to be positioned in pesos and make the rateto earn in dollars, “although being internationally competitive is low on the list, after reducing insecurity and lifting people out of poverty.”
For Pablo RepettoHead of Research at Aurum Values, The sustainability of this kind of stabilization achieved so far will depend a lot on what the economic team does with the rate in pesos. Explain in statements to this medium, that by not lowering the monetary policy index after reducing the crawl, it would imply that the State is going to be borrowing at very high hard currency rates.”
And, although an adjustment in the monetary policy rate was not mentioned, the market expects a possible cut this week. “A priori, it seems too risky to have lowered the ‘crawl’ without the inflation conditions that had been announced being met” by the Government itself, analyzes Repetto. And he adds that, “also in the global context, where there is depreciation of currencies, an additional factor is added to the appreciation of the peso.”
Lentini adds that without a doubt the measure It will have a negative impact on industries, although in a different way depending on the sector and region of the country. Well, the reading that the expert makes is that national policy seems to be more oriented to protecting people, providing them with greater purchasing power through their salaries, than to protecting SMEs or companies that failed to adapt throughout the decades.
“These companies, which have been in a comfortable situation for a long time, Now they face the need to adjust, which could make many uncomfortable and leave several out of the game,” he slips.
Instruments in pesos
Mariano RicciardiCEO of BDI Consulting, qualifies with the previous diagnoses and maintains that, starting February 1, the “crawling peg” at 1% will be the anchor against inflation. The expert remembers that this Wednesday new capitalizable Treasury Bills (Lecaps) and Capitalizable Bonds (Boncaps) will be put out to tender and that the result will surely be good and then announce a lowering of interest rates, monetary policy and that serves as a parameter for fixed deadlines.
Ricciardi calculates that The cut will not be in the same proportion because they will have to maintain the positive real rateThat is, the monetary policy rate, which yields a fixed term, has to remain above inflation and the devaluation rate, which will be 1%, so perhaps this Wednesday the interest rate that is above the 3.2%, drop to 2.8% or 2.7%, which makes it attractive to be in pesos for when the stocks are removed.
The strategist adds that, in addition, The dollar becomes a complicated issue, since it is cheap at the regional level. Well, all Latin American countries and Mexico are devaluing their currencies, while the Argentine peso remains fixed. This generates additional devaluation pressure among neighboring countries.
“If we do not adjust the exchange rate, we will lose competitiveness. The dynamics of wanting to reduce the nominal value of the economy, lower inflation and maintain the dollar stable becomes very complex, in particular, when the currencies of neighboring countries are depreciating,” analyzes Ricciardi.
And at this point, maintaining positive real rates without devaluing is a challenge. For this reason, experts recommend that conservative and moderate investors, instead of staying in pesos, begin to dollarize their portfolios in the face of a possible adjustment of the dollar due to the loss of competitiveness, “since the dollar is already far behind.” concludes Ricciardi.
Lentini concludes that fixed rate instruments will sustain high demand as they are tendered, while the system is still being adapted to be able to carry out transactions with “more freedom directly with dollars from the Special Asset Regularization Accounts (CERA).” It happens that the project that the credit card managers promised for last year was delayed, in the words of Federico Sturzenegger, for this quarter, a factor that becomes essential to continue the project that allows “dollarization with ours.”
Source: Ambito
