Dollar: After display

After the hard electoral defeat of La Libertad advances (lla) In PBA, the Dollar rose with force (4%) this Monday and exceeded for the first time $ 1,400 (closed to $ 1,408). Anyway, with the passing of the hours He moderated the bullish trend he had shown at the beginning of the day (he played a maximum of $ 1,440), without treasure sales, to the last four days. In this scenario, the City begins to wonder How much margin does the government have to try to control the currency, in the face of national elections in October. Until now, I had thrown all the artillery available: Strong intervention in futures, in the Mulc, rise of lace and very positive real rates.

It should be remembered that The stock of dollars that the treasure has in the BCRA that, since last week he used to intervene in the spot, It would be located at US $ 1,130 million, after being part of US $ 520 million on the days before the elections.

In turn, market sources also estimate that, as of September 3, The liquid reserves that the maximum monetary entity has are at the level of US $ 18,070 million, According to PPI, although the current scheme provides that it only intervenes in the upper limit of the band today in $ 1,470 (taking into account the wholesale exchange rate).

The market makes its bets: Does the burning of currencies follow?

For PPI, The economic team should use the upper band as a kind of “test” during a pair of wheelsand “monitor” how the market reacts. “If the dynamic is insufficient, there is a reasonable probability that the band itself moves, although not without the IMF’s blessing. After all, the agreement demands that the BCRA sell in the upper band, but those rules are subject to negotiated changes, as we saw after the first review, “he predicted a report from this stockbroker.

For its part, a report of the Consultant 1816 He wondered If the government is willing to use these reservations to defend the ceiling of the exchange band to the October 26 elections And open the possibility of if The government could let the exchange rate float without interventionalthough that would imply a strong turn in exchange policy and does not seem to be the chosen path, since Javier Milei said that There will be no changes in the current scheme, which implies that there are sales if the dollar touches the band’s roof.

“We assume that at least in the next days the position sold for futures of the BCRA will continue to growwhich according to our calculations closed on Friday at around US $ 500 million. Remember that A3 allows the central to have an aggregate short of up to US $ 9,000 million. Regardless of whether the BCRA defends the band’s roof or not“They added from this consultant.

For Eric Paniaguapartner of Dekadrak Venture Capital Consultingthe tools that the government will use are the same as it showed and established so far. “Sell ​​above the band’s roof, and dry the peso square with interest rate. I think that treasure tenders will be key in the next weeks “predicted in talk with this medium, and added in terms of possible ads: “They are possible, but it is not a time to change the course drastically. I think they are days for the government to remain cold in the economical, and seek to get closer to the voters you lost.”

Rates: Will they continue at the current levels?

“With the tools it currently has, if the government makes no change, It will rise, it will reduce the amount of pesos more and generate captive demand being able to have those lace with bonds. In addition, it will intervene on the roof of the band with the Central Bank and sell futures, since it still has a margin of more or less US $ 3,200 million and fall a roof, “he told Scope, Gustavo Gardey, Co-Founder de Bull Road Investments.

Last week, the rates operated with “relative stability throughout the week,” they explained from Cohenalthough they remained at high levels in real terms. “The caution at one day was 43.2% TNA, the repoal rate brought about 9.5 percentage points to 50.3% TNA, while La Tamar closed at 65.9% TNA,” they detailed.

“We estimate that the BCRA will continue to use these tools at least until October, in order to modea key factor to avoid greater deterioration in the financial conditions that have already impacted on the level of activity, “they expanded.

Bond repurchase: the alternative that the City sees to the current scheme

For Gardey, one of the main problems of the current scheme is that it does not allow to accumulate reservations, since it is focused on absorbing pesos; If the government buys dollars, injects liquidity and breaks that balance. However, it raises an alternative, that the BCRA intervene buying sovereign bonds (injecting pesos) and that, in parallel, the treasure bought dollars daily and discretionary. Thus, greater liquidity would be generated, the rates could be lowered and, at the same time, the constant accumulation signal of reserves would be sent without disorderly the exchange market. But for this initiative to be carried out, it would be necessary to agree with the fund.

From other sectors of the City, They also see the alternative of repurchase bonds, but in this case, with the sights set to underpin the curves in pesos. Anyway, from PPI they warn that this option would be “counterproductive in the current context of falling in the real demand for money.” “The only way to strengthen it is to force the banking system to increase its position in public titles. The BCRA would take advantage of the announcement of the next tender (Wednesday) to raise lace and adjust the integrable part with public titles”they anticipated.

It should be noted that the treasure faces maturities for almost $ 17 billion in September, of which about $ 6.4 billion are in private hands. “Our estimate is located around an increase of 5 points in the total lace on deposits to capture the aforementioned liquidity. However, each decision that tends towards a hardening of the monetary framework will further complicate the result of the mid -term elections. At this point, they are likely to choose the nominality as stable as possible, although at the cost of continuing to brake the activity, “they closed from PPI.