The analyst Salvador Di Stéfanoknown in the City as the “Blue Guru”signed an opinion column in which it evaluated the last movements in the financial market, after the turbulence days of the dollar.
Next, the Di Stéfano column:
HIGH MARIDA dollar with high rates
The change in the monetary and exchange regime takes us to a stage very different from that of previous years, be careful if we reach the band of the band.
He Central Bank Argentina (BCRA) He defined two intervention bands as exchange and monetary rule. In the upper band the BCRA sells dollars and will absorb pesos, and in the lower band you will buy dollars and inject pesos. This implies that When the dollar is closer to the upper band, we are close to a contraction of the amount of currency, which will result in a raised rise; While in the lower band exactly the opposite would happen, there would be an expansion of weights that would imply a low rate.
The BCRA is carrying out a clean flotation, since it does not operate inside the band. It could perform an administered flotation intervening regularly, or a dirty flotation, which would imply an intervention without prior notice, but none of it happens. On the other hand, the BCRA uses the toolbox to guide monetary and exchange policy, since it intervenes in the dollar’s futures market, and in the regulations of the financial system.
Faced with a dollar rise, The government works to put a roof to the dollar via sales in the future marketestimates by the end of August speak of an intervention that could be located around US $ 5.8 billion. The open interest in this market adds to August 28 $ 7,700 million, which speaks of a relevant participation. It is the first time in a long time that maturities of longer -term future dollar contracts are being renewed, and it is a good sign.
As for the financial system, the Lace up That has been carrying out, it leaves financial entities with less contributing capacity, they have to save more money to support the financing granted, this makes the active rate more expensive, which can have collateral damage to the market, as a greater delinquency, and with less credit an Amestamento in economic activity. With regard to the passive rate, a rise of lace will drive it to the rise, which will raise the business opportunity cost, this will surely delay investments.
The current scenario is unnatural to project a loan for market investment, the fees in pesos are ridiculously high, and although the dollar rates are more stable, the sum of the probable devaluation, the credit rate and the cost of the coverage make this credit a expensive product. If we take a credit in dollars one year old the rate is in 11% per year, this should be added a probable devaluation of the weight that according to the survey of market expectation (REM) of the BCRA would be around 14%, and a coverage in the future market to one year could cost 32.0% per year, this would give us a rate around 53.1% annual. Unfeasible for a country that according to REM projects an annual inflation.
The government found a great challenge after disarming Lefi’s stock in the market, so far the balance was a strong rise in the interest rate, and debt maturities are left ahead in pesos for $ 100 billion of which 45% would be concentrated in the public sector and 55% in the private sector. This operates for 4 months, and it is vital to be able to lower the rates in the tenders we have ahead.
The Government will not let new weights be injected into the economy, and before each tender that leaves surpluses it seeks to absorb them via lace, this operations will be repeated as many times as necessary, therefore we believe that the illiquidity will persist, which can drown the rise of the change rate, keep in low prices to financial assets such as actions and bonds, while the rates will continue at high levels, at least until high levels, at least until high levels Return, and increase the demand for genuine weights in the market.
In this context, the best thing that the market offers are the bonds in pesos that adjust by interest rate, as is the case of the Dual Boncap, which adjusts its technical value for the Tamar rate (fixed term rate for more than $ 1 billion). This rate is located in 64% per year.
It is vital that we follow the evolution of public accounts, every month that the Government achieves fiscal surplus will be ratifying the economic policy of budgetary responsibility, unequivocal sign that in the future inflation will be in a digit and the exchange rate will have a stable evolution.
Regarding public debt, it is good to point out that when this government assumed the consolidated debt of the public sector, the Central Bank added US $ 488,015 million, while last July added US $ 458,706 million, this implies a decrease of US $ 29,309 million. While there is a debate on the interests in pesos paid by the State, no one repairs the decrease of 6% of the public debt.
Regarding the dollar, when the Lefi were disassembled, it was quoted at $ 1,275, we think we need the exchange rate to come down from said brand to give a signal that he leaves the way to test the band’s roof. If the dollar is going to test the band’s roof, the BCRA is going to sell dollars and withdraw weights from the market, that would be a tragedy for the peso market, because it would make the interest rate be located a step higher, and re -inject pesos would imply that the dollar descends to the band’s floor, something unlikely in the short term, therefore, the market should live with rates in very high weights for a long time for a long time. In this scenario, banks should convert the business, to grow they should capture deposits in dollars or placement of dollar negotiable obligations, to mutate loans in pesos to dollars. This would leave them with very few profits, and problems with their structure expenses.
Conclusion: The market wants a higher dollar and lower rates, in this scenario it is impossible for it to happen. If the market wants lower rates, it must live with a lower dollar. The logic of low and high dollar is not applicable in the system of bands with precise rules. Think.
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
