this day, the market puts the magnifying glass on the current level of reserves and the measures of the Central Bank to contain the bleeding of reserves. According to analyst Juan Paolicchi, “the net reserves (of the BCRA are) below US$1,000 million. The main Achilles’ heel today is the exchange rate, and it is urgent to reverse it. Energy payments decrease, agriculture liquidates even more than a month ago, and even so the BCRA continues to sell (foreign currency)”.
The BCRA in the last nine days sold some $1.16 billion of its reserves at the same time that Sergio Massa faces meetings with his peers from different portfolios to reduce the fiscal deficit and set budget priorities for the rest of the year.
“We had reserve levels lower than this and we were able to deal with the situation. The same is going to happen in the coming months,” said the president of the BCRA, Miguel Pesce, in a journalistic interview when referring to the daily sales of international reserves. The seasonal peak in energy demand at times of high international prices is behind this string of sales, according to the official.
The new economic management will have a first litmus test this Tuesday with a conversion operation of Lecer, Lepase, Ledes and Boncer titles for another ‘Dual’ bond, to reschedule short-term maturities. The Government said it had a guaranteed commitment of 60% of the holders to accept the proposal.
The risk rating agency Moody’s said regarding Argentina that “it expects little general support for austerity policies before the 2023 presidential electionswhich will continue to weaken the country’s ability to meet the goals of the International Monetary Fund (IMF), especially in fiscal matters”.
Market sources do not rule out that the BCRA will decide this week on a new increase in its reference interest rate, in line with the expected acceleration in July inflation that will be reported on Thursday.
Bonds and country risk
In fixed income, the main sovereign bonds in dollars fell to 4.8%, led by the Bonar 2038, followed by the Bonar 2041 (-3.8%) and the Global 2035 (-3.4%). Thus, the country risk prepared by the bank JP. Morgan rises 66 units, to 2430 basis points.
In turn, the Treasury will seek to renew debt maturities for some $2.4 trillion, in what will be the first key test of Economy Minister Sergio Massa before the markets. Massa worked during the morning on the details of this debt swap together with the Finance Secretary, Eduardo Setti.
The titles that are sought to be renewed expire in August, September and October. The Treasury offers three dual bonds maturing between June and September 2023, tied to the maximum variation between inflation (+2%) or the official devaluationso the investor will receive the best result between both coverage options in pesos.
The minister anticipated last week that he had already obtained a commitment of 60% participation, a level that is mostly expected to come from ANSES and public banks.
The Central Bank bought $1.2 trillion of CER titles since the start of the run in June and the public bodies this Monday took part of the seven letters that the Economy will accept in exchange for the dual titles, a sign that they will intervene in the exchange .
Source: Ambito
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