Next Sunday the national legislative electionsin which the ruling party will seek to impose itself in order to promote deep reforms based on greater political robustness. But since the market is not so sure that this will happen, the dollar does not stop rising, which is opening the door to a “electoral carry trade”.
But, for some operators, the uptrend could be coming to an endwhich would once again boost the “carry trade”.
Investors rely on carry trade again
“The rise of the dollar in the run-up to the election responds more to a defensive movement than to new fundamentals. Investors are looking for coverage, either through funds in dollars, negotiable obligations or directly with liquid dollars in clients, in a typical context of pre-election uncertainty,” he said. Pablo LazzatiCEO of Insider Finance.
However, the executive clarified that An exchange rate jump is not expected after Sunday, regardless of the resultsgiven that local portfolios are dollarized at historically high levels (above 40% of circulating money), and this limits additional travel.
“What remains to be known is when the dollar will fall. In that sense, a favorable result for Milei could accelerate the decline, while an adverse result for the ruling party could make it more gradual, but it goes down in the end,” Lazzati noted.
“Those who are willing to take on a little more risk with a limited portion of their portfolio (up to 15%), we see a potential electoral trade: sell dollarized positions at these high values and take exposure in pesos through Lecaps and Boncaps with maturities after October 31 and until January 2026,” He added, highlighting that “these instruments could revalue in the short term if the scenario normalizes as expected.”
Options in pesos to beat the dollar
In this line, Bruno Bonacinafinancial advisor at Bull Market Brokers, agreed that investments in pesos through of sureties or Lecaps continue to be attractive for riskier profiles or those in need of immediate liquidity.
“Currently, sureties have a high intrinsic volatility led by the liquidity of pesos in the system. In this context, the options with the greatest predictability, in terms of the rate, are the short-term Lecaps, yielding between 3% and 3.30% monthly effective rate,” he commented.
In addition, Christian Solomonfinancial advisor and director of Vinver, pointed out that Treasury bills or funds in pesos that invest in these securities already offer nominal annual rates of between 45% and 50%.
“With a Central Bank that maintains firepower and international assistance willing to stabilize the exchange rate, it is possible that the dollar will remain stable or even fall in the coming weeks. In that case, a position in pesos could yield above inflation and the dollar, at least in the short term,” the executive concluded.
Source: Ambito
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