Although it is convenient for Caputo, at this time, to let the official exchange rate fall due to strong maturities of dollar-linked bonds and due to his position in futures, he could also take advantage and buy reserves.
The result of the elections midterm surprised more than one, with a strong victory for La Libertad Avanza at the country level of 40.78%, so the market adjusted his expectations quickly what it implies a strong movement in the official dollar. If in the previous one there was a claim for coverage and was questioned band schemethis ratification of the libertarian model gives it a lot of oxygen to continue with the modifications it needs to make. In this framework, the dollar is already falling sharply and this opens a dilemma for the Government: go out and buy foreign currency and put a floor on the price or punish those who dollarized.
It should be noted that there is already a history of sharp declines in the official exchange rate in recent weeks in the face of news that changed the outlook on supply and demand. The first was on September 22, when The Government temporarily lowered withholdings to zero and the US Secretary of the Treasury, Scott Bessent, tweeted for the first time about the situation in Argentina and said that they would do what was necessary to stabilize the financial situation in this country. The second was on October 9, when The same official bought pesos in the exchange market for the first time.
“The Government will face a dilemma today and tomorrow: puts a floor on the exchange rate (to avoid overreaction and start accumulating reserves) or punishes those who bet against of the continuity of the bands,” he asked himself this morning the 1816 consultantwho also warned that the market arrived very dollarized at the elections (via spot, futures and dollar linked) and that, in addition, the liquidity crisis in the peso market would continue “Unless the BCRA starts printing pesos in these next few days, the lack of liquidity in the market will be total”.
“We must also keep in mind that tomorrow Tuesday the exchange rate with which more than US$3,000 million will be paid is set of VN of the Letter D31O5 and, if you wanted, The Government could let that dollar be very low. If the BCRA does not print pesos in today’s wheel, The Central’s profit in futures could easily exceed one billion in the day (the monetary authority has a short that is around US$7,000 million) and that will be the amount of extra liquidity that would be missing on Tuesday, leaving everything else unchanged,” they detailed from the same report.
Will the Government come out to put a floor on the dollar or let it go down?
In dialogue with Scope, Andrés Reschini of F2 Soluciones Financieras, said: “I think the Government is thinking about reserves and after the election, with a result that was surprisingly favorable to the ruling party, must resume the strategy of recomposing reserves. But maybe At first, there is a sudden rearrangement as a result of a new, unthinkable political scenario. preceded by a high degree of coverage that will largely have to be dismantled”.
For this expert, It is “more important” to achieve a robust reserve position than to “punish” the market and sooner rather than later “the Government will begin to demand foreign currency.”
In turn, also in conversation with this medium, Claudio Capraruloeconomist and director of Analytica Consultora, assured that we must first wait to see how demand behaves. “Modifications in the economic program remain necessarythe problems remain “But such a favorable electoral result opens another toolbox for the Government.”he assured.
Finally, the economist Lorenzo Sigaut Gravina, in dialogue with Scopesaid that in the coming days The Government has some incentives to keep the dollar lower. As mentioned above, it faces, on the one hand, linked dollar maturities for more than US$3,000 million, so a reduction would alleviate the burden on the Treasury, and the end of this week has the maturities of the future dollar contractswhich would generate a strong profit for the BCRA.
“But you also have to accumulate reserves because There is a very large deviation with respect to the goal for the end of the year with the International Monetary Fund (IMF). On the other hand, United States that sold US$2000 million I could take advantage of the moment to lose weight. Because now the economic and political situation of the Government seems much stronger. There are many variables to calibrate,” added Sigaut Gravina.
For this economist, It would be “logical” for the Government to let the exchange rate fluctuate a little, at least the next few days but also take advantage, to the extent possible, to buy back some reserves and show that “there is a will to accumulate foreign currency”and in this way avoid, as happened in the past with the International Monetary Fund (IMF) in April, when it needed a disbursement of US$20,000 million, and now that the US Treasury had to come out to help Argentina with a swap of that same figure, plus other loans and debt buybacks.
Source: Ambito
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