Uncertainty in the city due to government signals: what worries analysts and what they expect

On the eve, Dollar bonds fell again, although they moderated their initial declines, while the country risk reached a maximum of almost four weeks (1,570 points). For its part, the blue dollar It seems to have no ceiling as it reached the nominal record of $1,430 and The gap is already the largest since the devaluation last December. At the same time, the MEP and the CCL They were not left behind: the cable dollar climbed to $1,428.72 and the “bag” arrived at the $1,428.46.

Dollar: the signals that the market is waiting for and that have not yet arrived

For the analyst Joel Lupierione of the decisions that could be taken by the central bank to moderate the rise in parallel exchange rates would be “raise the interest rate” of the Fixed deadlines and thus prevent the majority of less specialized investors from rushing to buy dollars. However, “The government does not seem to be in that dynamic, even more so with the latest statements that the Central Bank will have greater independence”the expert explained.

He therefore predicted a period of “greater tension and a little more challenging than it was in the first six months” and warned that “There will be fewer dollars from agricultural sources, which means that we may see a Central Bank under pressure from several fronts.”

For her part, the economist Elena Alonso He said: “I think the market is looking for Concrete measures regarding the lifting of the cepo and in favor of those who liquidate reserves, which is the ‘blend’ dollar. The exchange rate gap has to go down for them to start selling dollars, otherwise a dollar close to $1,500 will generate much more uncertainty.”

If the gap between wholesale and parallel exchange rates continues to widen, Alonso He considered that this will cause “a general halt in a lot of decisions, not only financial, but also economic, of companies and SMEs, because they generate business without knowing how much to cost for what they import, or how much to sell for what they export.”

Dollar: where will the focus be in the coming days?

“Going forward, we repeat that The focus will be on both the flows and the fine print of the recently announced measures.especially in relation to the interest rate of the system that ultimately emerges after the measures. We remember that the fall in dollar flows occurred in a context in which the BCRA strongly lowered rates to contain monetary expansion due to interest, something that had as a consequence the reduction of the attractiveness of the ‘carry trade’“, said Juan Manuel FrancoChief Economist of SBS Group.

In this new period, it was announced that The BCRA will stop issuing money to finance its remunerated liabilities, once these instruments are transferred to the Treasury, with the new Monetary Regulation Letter. One of the market’s doubts is how much fiscal cost will this entail.

Concern over BCRA reserves

Regarding reservations, a report by IEB analyzes that “beyond the slowdown in the pace of purchases, we highlight that the The government has more than met the goals agreed with the IMF, turning his back on the negotiation of a new agreement. In turn, The IMF itself predicts that the BCRA will lose reserves in the third quarterno longer under the pressure of the coarse grain harvest.”

“Although the Government has achieved approval of the law Bases and neutralize the fundamental changes that the Senate had introduced into the fiscal packagethe reserve situation does not look encouraging enough to calm the waters, and the time expected by the market will possibly be extended. In the absence of positive news that sheds light on the future of reserves, the exchange rate and the currency controls, the market will have to live with anxiety”he concludes.

central bank

The Central Bank did not accumulate as many reserves in June and the second half of the year is a cause for concern

Reuters

New monetary regime and “long life” for the exchange rate restrictions

Regarding the new monetary regime, one of the voices that gave their opinion after the announcement was Fausto Spotorno, one of the economists who listens the most Milei. In radio statements, he interpreted the new development as aimed at “eliminating any need to issue for fiscal or quasi-fiscal reasons.” In other words, he believes that monetary policy will not be so restrictive as to impede economic activity.

According to Spotorno There are three conditions for lifting the exchange rate restriction: “In addition to not issuing more pesos, it has to accumulate reserves and close the exchange rate gap”When should this happen? According to the economist, before 2025. “What everyone is asking for is to get out of the trap, there is anxiety, but because there are a lot of businesses that depend on it”he sentenced.

PPI analyzes what was a complicated June for the BCRA. “There are signs that the reserve accumulation scheme with a currency control has begun to run out”The monetary authority closed the sixth month of 2024 with sales of US$38 million.

For economists there were several factors that impacted: the increase in the exchange rate gapwhich fosters expectations of devaluation and consequently the appetite of investors for the dollar; the slow liquidation of the countryside; elderly Release of foreign currency for importers; and the energy payments.

Dark clouds are seen on the horizon As the season closes in which the field provides dollarsThe climate could clear for the Government if US bills arrive via the money laundering and the RIGIapproved by Congress.

“With a market increasingly eager to understand what the future will look like future of exchange policy. Caputo He repeated that everything will remain the same in the immediate future. That is, the crawl rate will remain at 2%, which remains unchanged. the 80-20 blend and that there will be no devaluation,” says a report from 1816. Hours earlier, in another document, he had given his perspective on the lifting of the currency controls.

When will this happen? According to 1816, the conditions are in place for the liberation to occur during this year. The question is how this will be done and when exactly. The government says that “there is no date.”

“He stocks did not prevent the accumulation of reserves between December and May, but in June The BCRA stopped buying dollars and in the second half of the year, seasonality plays against it. With the real exchange rate (RER) almost at its lowest level since the Macri era and the gap against the importing exchange rate, which until recently was almost zero, at 25%, we are seeing more and more impatience in the market to understand how the exchange rate movie continues, considering the maturity profile in dollars,” says 1816.