Prior to tender, BCRA accelerates low rates and already pierce 40%: how can they impact dollar and activity?

In this way, the monetary authority “Testa” a lower rate levelat a time when multiple sectors of the economy are warned about a marked cooling of the activity. But not every decision is free: A less high rate could imply that the coverage demand is increased, and add an extra pressure to the price of the dollar.

In talk with Scopedirector of the consultant Eco Go, Sebastián Menescaldihe said: “The BCRA is probing to reduce the monetary squeeze to boost the economy, at the cost of the exchange rate goes to the roof of the band and the BCRA has to go to intervene“It should be noted that on this day A Treasury key tender will be carried out which will measure how willing the market is to be placed to instruments after October, which will determine the “rollover” of the debt in pesos. The City hopes that the rate decline that the monetary authority gave this week to replicate in the placement of this afternoon.

“For the government it is essential to realine the macro expectations to resume a stabilization path on the way to the October elections. In that aspect, Retaking a low rate at an acceptable level will in some way improve the reactivation of the economy, facilitating credit for production and consumption. At the same time, There could be an impact on debt tenderslowering the offer interest rate, in order to have a lower level of future issuance that achieves in a certain way, dry the square without growing the future monetary base in real terms, “he also told this medium, the economist Federico Glustein.

Industrial activity in the eye of the storm

Within that framework, it should be remembered that Industrial data for weeks have been pointing out the obvious: with this level of real rates there is a decrease in the activity. In fact, the last data of the Manufacturing Industrial Production Index (IPIM) of July (at which time the rates begin to operate with volatility from 10 with the end of the Lefis) showed, In the endless measurement, that industrial activity fell 2.3% monthly and accumulated two consecutive months of retraction.

“The trend-cycle series, which excludes seasonality and irregular components, accumulates six consecutive monthly falls, with a rhythm of descent that accelerates since Februaryconfirming a process of most persistent cooling of the industry“They explained from ACM who also revealed the prospects for the coming months: “Electoral uncertainty and a restrictive monetary policy continue to play against sustained recovery.”

For this report, High rates generates “a higher financing cost” and the postponement of consumption and investment decisionsalthough they believe that “their reach is attenuated due to the low depth of credit to companies today (approximately 4% of GDP).” In fact, the traffic light that Econviews that publishes with indicators of economic activity argue that in July and August, in the monthly comparison, they are in contraction: Industrial, car and steel production, soy grinding, and construction, among others.

For the economist Lorenzo Sigaut Gravina Reactivate the economy is now very difficult even if interest rates are lowered, because There is little time (a few weeks) to the electionsand in that period it is not enough to reactivate the activity. What can be useful is Lower the rate to avoid a break in the payment chain, he said. In addition, he explained that, as the exchange rate has already risen, you can take the opportunity to lower the rates, because “Keeping them so high is not able to contain the exchange pressure and generates a very high cost for the economy.”

Dollar pressure: how the rate level impacts

For Claudio Capraulodirector of ANALYTICS, “Having lower interest rates can make credit accessible to SMEs”he said as positive fact. For this expert, the key with respect to “whether or not to press on the dollar is also in the credibility of the government exchange scheme, if the expectations are anchored there will be less dollarization of portfolios,” he said. It is worth remembering that the dollar after the electoral setback of La Libertad advances in PBA, rose 5.1% or $ 68.5, so it closed, this Wednesday at $ 1,423.5, to 3.3% of the upper limit of the band.

In this regard, Sigauut Gravinahe added that he believes that “The government has to get out of this enclosure to have the dollar against the ceiling and the very high rate. In fact, Having the rate at this level did not reach him and it seems that he will not reach him to contain the dollar. And while lowering the rate can generate more pressure, you already have it very close to the upper level. So I think what the government is looking for, especially in the short thing is to lower the financing cost“