Dollar: what is the recipe of a City guru to obtain foreign exchange financed by the market

The rise of interest rates on the part of the Federal Reserve of the US (Fed) has had a significant impact on the emerging world, including Argentina, explains the renowned financial guru Salvador Di Stefano.

The dollar strengthened has a negative impact in raw material prices, which are an important growth engine for emerging countries. This is because raw materials are priced in North American currency, so a more expensive dollar makes them more expensive for foreign buyers.

The decrease in the flow of financing to the region has made it difficult for emerging countries can cover their fiscal deficits and their investment needs. This has led to greater pressure on the currencies of these countries, which has increased the risk of devaluations.

Impact in Argentina

In the case of Argentina, The impact of the rate hike has been particularly severe. The country was already facing high inflation and a high fiscal deficit before the hike. The record monetary issue to finance the Treasury and Payment of debt interest has contributed to the depreciation of the Argentine peso. He Dolar bluewhich is an indicator of the informal market, has been triggered. In that context, Di Stefano shares his recipe to get dollars financed by the market.

An ingenious strategy, he assures Di Stefano, consists of acquiring dollars financed through the market itself. This approach involves the purchase of Negotiable Obligations (ONs) issued by local companies under foreign legislation. These financial instruments They can provide investors between 5% and 10% returns in dollars. They are purchased in the local market and the returns are not subject to Income Tax if they are purchased in the name of an individual. However, they are subject to the Personal Property Tax.

The strategy is simple: acquire ONs denominated in dollars with pesos and that pay amortization and profitability in physical dollars. Once acquired, this instrument is guaranteed, using the ONs as collateral and going into debt. for 80% of the investment at a rate of 100% annuallyin order to acquire more ONs.

The objective of this strategy is to increase the amount of ONspossess assets denominated in dollars and liabilities in pesos at a rate that would be lower than the possible devaluation of the dollar in the coming months.

For example, if this operation is implemented in the next 90 days, the interest rate that we could pay would be approximately 30%, including expenses, while the dollar in the same period could increase between 50% and 70%. Thus, profit is obtained in dollars without investing one’s own capital, only leveraged in pesos with the initial investment.

However, like any financial operation, has its riskss. The ONs could depreciate and it would be necessary to replace guarantees. Therefore, it is essential to have a financial cushion that allows you to face these possible risks.