The support of the US Treasury Secretary, Scott Besent, to the government of Javier Milei painted green to Argentine assets And he took pressure from the dollar at times where that scenario looked more and more complex. Is that in the previous Javier Milei trip to the northern country, the official of Donald Trump He said they are “willing to do whatever is necessary” To support Argentina and that includes put on the table “All stabilization options”.
Thus the variables mentioned are: SWAP lines, direct currency purchases and government debt purchases called in US dollars of the treasure stabilization fund.
The first of them implies A financial agreement by which Both countries exchange currencies for a certain period, with the commitment to return them later under certain conditions. In general, The United States does not make bilateral swaps with emerging countries, it only performs them with central banks of advanced economies, except exceptions.
Some of the swap that has the Fed They are with him European Central Bank, Japan, England, Swiss and Canada. It should be noted that the Fed also He enable temporary lines with other countries (such as Brazil, Mexico, South Korea or Singapore), but always under very specific conditions and by limited deadlines. With Argentina, There was never a direct swap line.
On the other side, Argentina has a single Swap agreement in force with Chinathrough the Popular Bank of China (PBOC). It is for the equivalent of about US $ 18.5 billion. It was signed in 2009 with Cristina Kirchner as president and then in 2014 a second agreement was signed that was renewed in 2017 with Mauricio Macri and complemented at the end of 2018.
The economist Federico Gluisteinin talk with Scopehe said: “In theory the most accurate option would be a swap line because It gives immediate liquidity, on a large scale and without compromising own reserves in case of not being used. Quickly stabilizes expectations and gives certainty in the short term “he explained, although he also provided warnings. “It requires a strong support and confidence of the US since Argentina has serious non -compliance history”he said.
Direct currency repurches and bond purchases in dollars
The direct currency repurchases They imply that A foreign government or central bank sells dollars in the market in exchange for another currency to inject liquidity or support the recipient country. It is a measure exceptional And what you are looking for is a coordinated intervention, to provide support to a strategic country at the exchange level.
“I believe that the direct purchase of foreign exchange (which changes us pesos for dollars in the open market) would be ideal. A priori, It would not be a new debt line, at least not accounting, and could maintain a exchange rate more in line with what the government seeks“He said to Scope Eric PaniaguaDekadrak Venture Capital Consulting partner.
Finally, The purchase of debt called in dollars of the Argentine Treasury through the US exchange stabilization fund (Exchange Stabilization Fund, ESF) would imply that The effort buys Argentine bonds in dollarsissued under international legislation. This option was already used in the past to support countries like Mexico in 1995 and It is only activated with high -level political authorization.
“There would be no better program than a sovereign debt repurchase program in dollars”he told this medium Gustavo GardeyBull Road Investments Co-Founder and said it would help put a floor to the sovereign debt and would drastically reduce country risk. “The debt does not increase because you use dollars to buy your own debt at a lower rate, so you are generating a debt roll at a lower rate and making a much more attractive and sustainable path to you,” he added.
This expert said that, however, Have dollars deposited to do Faced with private debt expiration For January and July next year, it is Another attractive option. “You are clear all the rumors of default, uncertainty is eliminated and you would have to open more normal, more traditional markets,” said, although he considered that already in case, It is very good news the message that Besent sent on the morning of this Monday.
Finally, LiTein said about these last two options: “Direct currency repurchases require the delivery of an asset or liquid royalties, but there are possibilities as it is a more financial agreement. The debt called in Treasury dollars is viable but can be expensive to be used as a collateralto be changed for fresh dollars to be used by debt but It also has the risk depending on the date of maturities and failing that, on the responsibility of payment of these treasuries “.
Finally, Andrés Reschini, F2 financial solutions closed: “I think what must be highlighted is that Argentina receives this support for a matter of geopolitics and because it has virtually closed doors to the voluntary international market. Beyond what scheme the operation is instructed, what will have to be seen is under what conditions It is done and even more important will be that Argentina achieves in the meantime to carry out the background reforms necessary to enter investmentIf the economy can take off sustainably. Without it, the rest will run out at some point. “
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.
