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Dollar alert, pressure on reserves and keys to investing

Dollar alert, pressure on reserves and keys to investing

The reserves are very scarce, the field is not liquid, the tourism balance is negative, and there are high maturities for the year 2025.

The Bases law should be approved on June 12, and this should have a positive impact on the markets.

Reuters

On May 31, Bookings They closed at US$28,664 million, while the monetary base stood at $17.2 trillion, and the sum of monetary liabilities in pesos amounted to $18.6 trillion. This implies that monetary liabilities total $35.8 billion, which compared with reserves of $28,664 million gives you an equilibrium exchange rate of $1,248. Any resemblance to the value of the MEP dollar is mere coincidence.

In it central bank There are liabilities in dollars for $9.2 trillion, which are the Bopreales that the entity placed, measured in dollars, amount to US$10,224 million.

Clearly, the country lacks reserves, no matter where you look at the Central Bank’s balance sheet. We would need these reserves to be around US$35 billion in the next 3 months. For it, It is impossible to continue supporting a blend exchange rate, where 20% of exports are sold abroad and 80% in the domestic market. This would also affect the prices of the products we export.

In the month of May, exports of oilseeds and cereals totaled US$2,613 million, while, in May 2023, dry through, they totaled US$4,213 million, and in May 2022 US$4,233 millions. Clearly the field is not liquidating.

In the first 4 months of the year, imports collected were US$8,509 million, while exports collected totaled US$20,608 million.

In 4 months, total imports were US$17,777 million, US$8,509 million were paid, the State stopped paying for imports for the equivalent of US$9,264 million.

With reserves of US$28,664 million, bopreales for the equivalent of US$10,224 million, and import debts of US$9,264 million, the reserves are extremely scarce. However, as the National State achieves a fiscal surplus, and there is no issuance of money without backing, the dollar remains at reasonable levels. What cannot be avoided is recession.

The tourism balance continues to be very deficient, in 4 months it reached a deficit of US$895 million, clearly Argentines do not abandon the idea of ​​traveling, and with this exchange rate and in light of the results, it seems that it is not so burdensome for a group of the population to travel abroad.

Conclusions

  • The Government should show better parliamentary management, and explain what will happen with the laws that are not favorable to them to maintain the positive fiscal result. The Bases law should be approved on June 12, and this should have a positive impact on the markets.
  • The interest rates on LECAP and fixed-term loans in banks are very low, which does not encourage investors to sell dollars to position themselves in pesos. This encourages demand for the American currency.
  • On Thursday, June 13, the price index for the month of May will be known; inflation is forecast to be no higher than 5.5% monthly, and it would be a good indicator looking into the future. If this figure were correct, inflation for the semester would be 74.0% and annualized 281.1%.
  • In the second half of June the government should pay or renew the Chinese swap where US$ 5,000 million expires, it is a key figure, given the shortage of reserves and the few liquidations in the field.
  • Payments on the Argentine public debt come due on July 9, it is very emblematic that it comes to fruition and lays the foundations for lower volatility in financial assets.
  • In the next 100 days, Argentina needs to gain access to international financial markets. Between now and December 2025, US$ 17.5 billion of debt matures. If we can place bonds in the markets, it will be difficult for us to honor all this debt, with such reserves. little.
  • The country man is wrong for not liquidating, the prices of wheat and corn are higher than in Chicago, soybeans achieved a good price. However, producers expect a devaluation, lower withholdings or an increase in raw materials in world markets; of the 3 possibilities, it seemed that none of them were going to happen. Those who postpone decisions will have a more difficult time for the 2024/25 campaign.
  • The Government needs more management, and to make the government program explicit, otherwise there are very contradictory narratives that make many business actors unsaddle themselves until it clarifies, and in this way hinder short-term economic growth.

Source: Ambito

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