Dollar in definition zone: the three scenarios that the City projects according to the electoral result of 26-O

Five wheels are left to the meeting of President Javier Milei with his US pair, Donald Trumpwhich is scheduled for Tuesday, October 14, and 14 days to the mid -term national elections. City sources assure that Treasury’s fire power for the next 15 days amounts to about US $110 million per day to contain the current exchange rate, depending on its current dollars.

But, it is known that if daily sales do not reach to contain the exchange rate, the BCRA would have to intervene. Within this framework of bulky debt maturities, the market already discounts a change of exchange regime for post -elections.

Dollar: the changes that the market claims for the day after

From Facimex They pointed out that, after the elections, It will be necessary to adjust the exchange scheme to avoid an excessive appreciation of the weight and, at the same time, prioritize currency purchases by the treasure. “The American support will allow to continue fulfilling the commitments, but accumulate reserves in an organic way will be key to achieving a genuine low risk of country and recovering access to market financing,” they said.

In that sense, they warned that two important changes will be necessary: recalibrate the exchange regimewhich can be done through different paths such as updating the current band contemplating the difference between local and international inflation, moving towards an intervention band scheme, or even migrating towards pure flotation; on the other hand, The treasure should begin to accelerate the purchases of dollars with the weights generated by the primary surplusideally with a pre -established schedule, they concluded.

This look is in tune with the one expressed by SBS group. “The exchange scheme could be modified after the elections, with the primary objective of accumulating net reserves that allows a sustained reduction of the country risk to return to credit markets,” they specified. In this regard, they revealed that The market verdict regarding the electoral result will be key in terms of peso demandvariable that may play or favor or against the transition to a exchange rate regime that allows the sustained accumulation of international reserves.

Optimistic scenario: good electoral result for the government

In a victory scenario of the ruling at the national level, according to Facimex, There would be space to move towards a dirty flotation by removing the remaining exchange controls and enabling a significant decrease in real interest rates. This would create a framework of “very good prospects to re-acce to the market where the use of reserves for exchange intervention would be limited to episodes of instability,” they said.

For its part from SBS groupthey considered that “the government should take advantage of both US support and the extraordinary export settlement flow to initiate A virtuous path of accumulation of reserves, trying to avoid what happened during the thick harvest of this yearin which, under flexible dollar, the commercial flow went to the non -financial private sector instead of reserves. “

“The optimistic scenario means having the US as a backup of the last instance, but advancing towards a free flotation where pending exchange restrictions are eliminated, a daily purchasing program of dollars is established (which would require the implicit use of the inflation tax, that is, issuance of pesos) and the monetary policy is normal by setting a reference rate that provides a certain guide. With the support of the US, the currency should not suffer an overshooting and inflation, after an initial leap, would then download, “they added from Max Capital.

Neutral scenario: parity between ruling and opposition

In an electoral parity scenario, The exchange band could be emphasized to correct the induced appreciation for not having contemplated the difference between local and international inflationexplained from Facimex and expanded that this would imply recalculating the ceiling by adjusting to 2.5% TEM instead of 1% TeMs.

“It is gradually progressing with the removal of the remaining exchange controls maintaining real rates of a high digit, in a context where there would be decent perspectives to access the market,” they detailed according to this virtual scenario.

Pessimistic scenario: Another llaly defeat as in PBA

“In an interpretation of the negative market as for PBA, the demand for weights would fall, pressing not only on the exchange plane but on the nominality in general, even in a context of stagnant activity,” they said from Grupo SBS and added: “While there are, looking at monetary aggregates against GDP, ample space for the remumination in pesos, If the demand for domestic currency does not rise or falls, hardly the disarmament of contractive posture can come without acceleration in the nominality “.

From SBS group They warned that, beyond exchange definitions, the key will continue to be the demand for pesos. “A significant fall in the demand for weights could compromise treasure financing in tenders, which would make the decline in interest rates difficult,” they said. In that context, they explained that This scenario would not only affect economic activity, but would also have fiscal implications. “The delay in the rate cut would imply a greater burden of interest, which would put additional pressure on the primary fiscal result,” they expanded.

Finally, for Facimex, in a scenario of defeat of the ruling party, andl adjustment of the exchange scheme should prioritize the use of intervention reserves pointing to safeguarding external financing available in a context where the prospects of accessing the market would moveso, they hold, “There would be no room for a relaxation of exchange controls or a return of real rates to a digit zone.”