After the strong devaluation in December (which implied a rise in the official exchange rate of 118%), common investment funds (FCI) indexed by CER were all the rage, that is, those aimed at assets tied to inflation. The intention was to cover the transfer to exchange rate overshooting prices, especially taking into account that the economic team announced at that time a subsequent exchange rate sliding rate of 2% per month that it has maintained until now. So much so that the prices of the shortest CER bonds skyrocketed and today they operate with negative rates that even exceed 80% in the secondary market.
The expansion of the gap and, above all, the gap between the crawling peg (2%) and inflation (25.5% in December) made last month the attractiveness of dollar-linked funds reappear, which are indexed to the rate official exchange rate. These securities rose in January due to the feeling of unsustainability of the current rate of depreciation in the medium term.
The market began to anticipate that an acceleration of the crawl could take place in March and a more important correction could arrive in April., with the aim of guaranteeing the liquidation of the coarse harvest. For example, the Market Expectations Survey (REM) published this Tuesday by the Central Bank showed an average forecast by City consultants of an acceleration of the official dollar to 8% next month and 18% in April. In future dollar contracts, the outlook for April looks somewhat more limited (around 13%).
Javier Casabalfrom Adcap Grupo Financiero, told Ámbito that, in recent weeks, since December inflation data was published that was lower than the 30% that was initially expected, “Rofex is adjusting downwards.” And it suggests that a new discreet jump by the officer is no longer taken for granted. Although there is an acceleration. “For February it is assumed that there has been no jump for quite some time (which remains at 2%). A higher crawling peg is expected for March and For April the market doubts whether a jump will be needed or not”considered.
In that context, Alejandro Kowalczuk, director of Argenfunds, referred to the issue in a talk for investors organized by BAVSA. He estimated that there will be a “crawling acceleration” in the coming weeks and a more significant “correction” in April or May. And that is why he pointed out that an interesting alternative is orient yourself towards dollar linked funds in contrast to CERs.
Dollar: what does the Government say?
Although other operators are somewhat cautious by pointing out that it is still not certain what the tandem’s next step will be. Luis Caputo – Santiago Bausili in exchange matters. For example, this Wednesday Caputo referred to the issue in a television interview before the opening of the markets in which he ratified his adjustment plan after the ruling party’s failure in the vote on the omnibus law.
There, the minister discussed the idea of some economists who propose that the dollar will remain behind without a new exchange rate jump and implied that they will try to maintain the crawling peg strategy as a nominal anchor as much as possible. Caputo argued that December inflation was lower than initial expectations, that in January it will be around 20% and that it will continue to decelerate in February and March. If your forecasts are met, He assured that “the exchange rate would be 17% above the dollar when it came out of the stocks in 2015.”after the devaluation that Macri applied a few days after taking office.
In addition, he considered that it is a “mistake” to compare the current real exchange rate with the one that existed at some point during the previous government “because it was a situation of collapse” (in reference to parallel dollars in real terms). “We are going towards fiscal balance, lowering inflation, there is no financing from the BCRA to the Treasury… If that is the situation, that cannot be the real exchange rate” of equilibrium, he concluded.
All in all, a good part of the market expects, at least, upward crawling. Even more so after the message left by the Staff Report of the International Monetary Fund (IMF). After weighing the initial strategy of overshooting plus devaluation at 2% to try to anchor, he stated: “Looking to the future, the authorities agreed that the exchange rate policy will evolve in a manner consistent with the objectives of reserve accumulation that avoids a rapid erosion of reserves.” competitiveness gains, while the new anchor of monetary policy would assume the role of anchoring inflation.”
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