We have “increased financial jitters after the flashy buyback announcement of public debt“, said VatNet Financial Research, noting that “what seemed like an attempt to raise expectations ended in the opposite direction, with a weekend that showed further devaluation of free dollars and stock market falls“.
The repurchase measure does not have the expected result
“At the moment, the repurchase of sovereign bonds in dollars is not achieving its objective of raising the price of these or lowering financial dollars. Meanwhile, the BCRA It continues to have a negative balance in the exchange market. Thus, the question arises as to whether the measure will continue, given that neither the context nor the results are accompanying,” said Roberto Geretto, Fundcorp economist.
He recalled that “after some uncertainty, the BCRA He backed down with the improvement in the rate he paid to (common) funds, since it produced an outflow of deposits and the sale of public securities by banks”.
“The still misaligned relative prices and the current inflation propagation mechanisms make (lowering prices…) challenging in an election year,” estimated the consultancy Ecolatina.
inflation expectations
However, he pointed out that, without detriment to this, aiming at a monthly inflation of 4% it’s better than just trying to keep it from speeding up. In this sense, the coordination since the beginning of the year is valuable, since, in any other way, inflation was going to comfortably exceed triple digits this year.
For its part, Delphos Investment pointed out that “the hard-dollar bond repurchase operation It would have already consumed about $370 million in about 10 business days, but it has failed to positively influence financial dollars, which continued the upward trend.”
“Given a foreseeable resumption of the drain of currency by the BCRA interventionsthe concerns are accentuated by the state of the drought pending the harvest in a few months to cushion the scenario of shortage of dollars,” said economist Gustavo Ber.
The General Activity Index (IGA) carried out by the Orlando Ferreres & Asociados Center for Economic Studies, the general level of activity registered a decrease of 0.5% year-on-year in December, accumulating for the total of 2022 an expansion of 4.8 %.
Outlook for the economy
“The political class, necessarily for a matter of subsistence, must this year migrate to disruptive solutions that they leave the private sector resource extraction model to finance growing public spending, towards a different model that applies tools to stimulate investment, which are not merely those of the subsidy,” said Leonardo Wagner, a member of the Quilmes Industrial Union .
“For example, the application of tax relief scales to the greater productionIn the global context, central banks are under increasing pressure to do more to help directly address the problems of the day, including climate change.
“But your most useful contribution will be to keep the financial and price stability And, as the painful return of inflation has underscored, they need to stay focused on that,” Capital Economics said.
Source: Ambito
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