Dual bonds and dollar linked they had a strong demand On the first day after runoff which confirmed that Javier Milei is he President elect. The CER crow was punished since the strategies focused on look for exchange coverage given the possibility of a devaluation being validated. What to do in this context?
In a report of PPIon the sovereign debt in pesos, highlighted that there are several key factors to analyze after the result of the runoff and Milei’s first presidential speech, some of them are: Dollarization was not mentioned, there is a commitment to honor existing obligations, and a rejection of gradualism was expressed.
“These elements together suggest a rapid approach towards exchange rate unificationin which the incoming government will also strive to comply with debt commitments denominated in pesos”they said from PPI.
For this reason, from this broker, they asserted that this moment “seems somewhat more favorable for dollar linked strategies compared to those adjusted for inflationalthough current nominal conditions may lead to a rapid transmission of post-devaluation prices“.
“The extent and effectiveness of this transmission remains uncertain, and will depend on the composition of Milei’s team and the initial execution of its economic policies. However, “The risks associated with policy execution persist and the possibility of an uncontrolled nominal scenario cannot be ruled out.”they warned.
On his part for FMyA, The dollar linked together with Promissory Notes, and Future on ROFEX they will have a strong demand these days in the expectation of a devaluation.
Hedging against devaluation while waiting for signals
For its part, Lucas Decoudfixed income analyst at IEB Grouppointed out in dialogue with this medium that “the more moderate statements of the winning candidate added to the fact of ensuring that he will comply with all contracts are “good signs for debt in pesos”.
For this analyst, the demand for exchange coverage through dollar linked and dual bonds will likely continue given that “the market is beginning to incorporate expectations a discrete jump in the major exchange ratewhich is reflected in future dollar contracts“.
It should be noted that Rofex contracts from December onwards had increases today of between 18% and 30%. “Today The CER curve showed falls in the medium and long sectionalthough it is not clear what can happen from now on, since it can be expected months with rising inflation data“Decoud noted.
In this regard, he indicated that this projection is supported by the announcement of the program of the dollar differential that “will have an impact on pricesthe resumption of crawling pegand repressed inflation that maybe I should open the next government“, said.
“The market seems to be allocating a lower probability of dollarization occurring in the short term and could be waiting a correction of the official exchange rate greater than expected”the expert closed.
Source: Ambito
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