Key issues in the city: dollar stocks, rates, Bases law and the harvest, in the sights of analysts

Within the framework of the debate on the ‘Bases Law’ promoted by the government of Javier Milei in the Chamber of Deputies, analysts give their opinion on the economic future of Argentina.

The Government, which has significant support from society according to recent surveys, faced a massive march last week against cuts to universities implemented to clean up public accounts.

Dollar: the market clears the possibility of a short-term exit from the exchange rate

“It is a harsh reality to realize that “You don’t have enough dollars to get out of the trap.”Ricardo Delgado of the consulting firm Analytica said in radio statements.

“Releasing the stocks under these conditions would again imply a devaluation jump that would place us at who knows what level, but that would accelerate more inflation that would generate macroeconomic disorder, which the Government wants to avoid at a time when some results are beginning to be shown in terms of inflation and exchange rate stability.

“Beyond the game of political statements and acts, the necessary balance of internal and external fund flows requires delicate management that should be monitored in addition to the fiscal surplus that can be computed, given the precarious state of official finances,” said VatNet Financial Research.

“There remains the challenge of interpreting the great decline in the real economy with the prevailing optimism in the financial sector, estimating which of the two sectors will ultimately have a decisive influence,” he added.

“The rate reduction decided by the BCRA is in line with the behavior of high frequency inflation indicatorswhich anticipate core inflation around 3-4% month to month and headline inflation around 8% in April due to regulated increases,” estimated Delphos Investment.

The local market reached its ceiling

“Despite lowering interest rates and validating rates higher than those of the secondary market, “The Treasury could not refinance all the maturities of the last tender”recalled Roberto Geretto of Fundcorp.

“This shows that The local market also has a limit, It is difficult to want to refinance debts at negative rates, issue Bopreales to pay importers, and generate a surplus to absorb the monetary base. Anyway, the net financing for the month is more than positive,” he explained.

“As happened previously, the new reduction in the BCRA rate is awakening a modest rearrangement of financial dollarswhich could become ephemeral again to the extent that the scenario of excess supply, restrictions on demand and the harsh recession that lead to the “decanuto effect” (sale of savings dollars) continues in the background, he noted.

“We remain constructive in the medium term in Argentine risk assets, highlighting that we are entering an area in which the firm delivery of the chosen economic direction is beginning to be key,” stated the SBS Group.

The thick harvest is coming slower than expected

“Operators remain attentive to the slower pace that comes interspersing BCRA purchases in some wheels from the fluctuations in volumes and the greater participation of importers, even though it is trusted that this respite would be temporary in the face of the next acceleration of liquidations of the coarse harvest,” said economist Gustavo Ber.

“The timing of the positive impact of the larger harvest on the economy depends on the entry of grains into the commercial circuit, that is, of the producer’s sales decision”said the Mediterranean Foundation.

He added that “what is being observed is a very slow marketing of the harvest for now. In the case of soybeans, only 5% of the expected volume had been sold at the end of March, a low percentage considering a historical range of between 10% and 20%.”