Fixed dollar and high rate: what should you invest in?

. – The rise in the exchange rate directly benefits exporting companies, and sets a higher floor for imports. We expected a dollar at $500 by the end of the year, with this floor of $350, we have an expected increase of 42.9% in 4 and a half months. We believe that it is better to liquidate exports today than to wait for the end of the year with threatening inflation and interest rates of around 10% per month. Not to mention active rates.

Do you think the Central Bank is going to buy dollars?

. – Obviously, it is a 22% jump in the price of the dollar, which is a very important prize to speed up the liquidations that were delayed. On the other hand, I think this is going to slow down a lot of imports. Imported products will become very expensive. For example, investigate how much an imported car is worth, and an apartment.

Is the rise in the official dollar going to generate an increase in prices in the economy?

. – Of course, but don’t forget that prices are formed in the market, and demand is very depressed due to the deterioration in the purchasing power of wages. What we will have ahead of us is a recessive scenario, I would worry about the drop in sales that we will have at the counter.

How do you see the rate hike?

. – This should have been done much earlier by the central bank. Today, with a 9.83% monthly rate and alternative dollars between $640 and $700, an incentive is generated to sell dollars and speculate with a placement in pesos.

For example?

. – Suppose you sell the MEP dollar at $620, and you place that money in a treasury bill that matures on October 31, by that date you will earn 25%, which would leave you with a balance dollar of $800. No It seems crazy to place a letter in pesos to keep that value in the future.

Do you say that the rate begins to play?

. – Correct, today the effective rate of a fixed-term placement is located at 209% per year, it is very competitive.

Negative effects of rate hikes?

. – You are left with a very expensive credit, that will affect economic activity. But in the market there are many scoundrels who, having money, requested credit because the rates were very low. With this new rate chart, many will sell dollars to manage with their own capital, and this will give the market more liquidity.

Does the rise in rates accelerate the rise of the leliq stock?

. – Correct, which implies an increase in the interest paid by the leliq, which is called endogenous emission. This is a problem that is always ignored, it does not create a problem today, but in two months we will have a very significant rise in monetary liabilities.

Is bread for today hunger for tomorrow?

. – It is a window of time that helps to momentarily stabilize the economy, you freeze the exchange rate and raise the rate, whoever takes advantage of it earns a lot of money, sells dollars and is placed in the rate, you have to be precise to return to dollars before everything back to normal. It would seem that for two months the idea is to stabilize the price of alternative dollars, and to get it off the front page of the newspapers.

In the long term?

. – In the long term, we’ll see. They are not measures that generate a structural change. It is a short term strategy.

That What about bonds and stocks?

. – The bonds would reach a floor and recover positions, I am not worried about yesterday’s drop, I think they will have room to recover, if the Central Bank begins to buy dollars, the IMF disbursement arrives, and gross reserves return to US$ 30,000 million.

How do you see the dollar futures market?

. – The implicit rate decreased significantly. We see that the December position continues to be the one with the highest interest rate, the dollar as of December 2023 is trading at $571, and this gives us the right to have the official dollar trading above $500 in December, something that we have been considering long time. On the other hand, a 100% gap would leave us alt dollars close to $1,000.

If I sell the MEP dollar today and place it in a fixed term until the end of the year?

. – You sell it at $621, and until the end of the year you get a rate of 52.5%, this implies that you could have a dollar equivalent of $947 at the end of the year.

So?

. – The rise in rates was super necessary to calm the bullish expectations of the dollar. We said it a long time ago, but the government refused to use this alternative, it used it and it will bring positive results to stabilize the price of the dollar.

Conclusion

. – The rise in the wholesale dollar and rates are a necessary but not sufficient condition to bring peace of mind to the markets.

. – A strong fiscal adjustment would be necessary, so that prices do not get out of control. Inflation will be high in August.

. – The positive impact is that the Central Bank will begin to buy dollars in the market, since exports will speed up liquidations in this scenario. On the other hand, imports with this exchange rate are not competitive in the domestic market.

. – The rise in the exchange rate unlocks the negotiations with the IMF, in this context Argentina will soon receive a disbursement of US$ 7,500 million, which will give air to the reserves.

. – A window of time opens with alternative dollars that will stop rising, will leave the front pages of the newspapers, and will guide the economic debate towards an economy that will have high levels of inflation and recession.

. – The drop in the Qatar dollar is very important, the personal tax rate is reduced from 25% to 5%, with which the tourist dollar would be $658. This implies that the preference when spending money abroad changes , we use the card again and abandon the cash.

. – With these rates it is impossible to request bank financing, companies will have to return to work with their own capital, be careful with companies that do not have an anti-cyclical fund, it will be difficult to work with financing with these interest rate levels.

. – From these columns we have encouraged companies to be highly financed, that have established significant stocks, and that if there is some liquidity, they are placed in dollarized assets, from dollar bills, sovereign bonds or negotiable obligations. With which, these measures that were adopted do nothing more than highlight the strategy developed. Those who acquired negotiable obligations or promissory notes tied to the evolution of the linked dollar, yesterday had their first great satisfaction, the rise of the official dollar 3 months ago, which is higher than inflation, we will see what happens in the coming months, the next management will have to make a major adjustment in the linked dollar when he takes office.