The perception remains the same despite the partial recovery of activity levels and the twin surplus in June. Why? The explanation lies in the exchange rate gap and the appreciation of the real exchange rate in recent months.
However, the consultancy clarifies that the uncertainty marked by these two indicators “They moderated with the announcement of intervention in the financial dollar market”.
GAP INTERVENTION: CALMING SIGNAL OR WARNING?
Comments from Personal Investment Portfolio (PPI) They cast a shadow of doubt over the latest measure, announced within the framework of monetary policy, but understood by the market from the perspective of exchange rate policy, with resignation to a higher level of reserve accumulation.
This is how PPI sees it: “the announcement was disguised as a sterilization of pesos that, in practice, implies a latent threat of sale in CCL of around US$ 1.8 billion.
As expectations do not play a minor role in the economy, the warning from the BCRA and a lower than expected use of reserves was enough to compress the gap to 42.8%. The estimated intervention according to PPI in the first nine rounds was US$ 213/240 million.
Likewise, the consultancy understands that the CCL dollar at $1425 should be considered “overshooting” and the gap to be narrowed so that the measure is effective and the way out of the restrictions is outlined in a more concrete manner.
If the strategy were to stop at lower inflation and will not move forward on lifting restrictionsit would then be “of a short blanket“given the shortage of reserves.
DOLLARS, THE MOST PRECIOUS ASSET
Net reserves are currently back in negative territory, according to PPI around –US$6.471 millionconsidering as liabilities government deposits for US$1.372 billion and BOPREAL maturities at 12 months sight by US$2.173 billion.
That is why the market is waiting for some clarification on the shipment of gold abroad. Luis Caputo, Minister of Economy, limited himself to commenting that it is a measure that seeks a return on the asset. Milei guaranteed a repo at least to cancel the capital owed to bondholders due in early 2025.
PPI’s liquidity estimate for investing is US$10.662 million. If the repo were to be made for gold, they would be obtained US$4.863 million additional.
However, consider the “nervousness” of the bondholders “understandable”, a priori for two reasons: the latent threat of use US$1.8 billion to contain the gap, MULC flow against for seasonal reasons.
The consultancy then adds a third, possibly the most sensitive even in political terms: principal and interest payments Globales and Bonares for US$4.6 billion in January would send net reserves to the area of -US$13 billionas long as the restrictions are not relaxed. Massa ended his term with -US$11,000.
In this context, the BCRA decided to make import payments more flexible. It is expected to be a measure that The IMF discounts it as approvedin a context of uncertainties regarding a new agreement and possible disbursement of fresh funds.
The flip side of the decision once again falls on the reserves and the risky impact that it can generate on the accumulation of foreign currency.What is the BCRA’s move? Sell more reserves at a lower effective exchange rate in a context of scarcity? Or is there an ace up its sleeve? Getting rid of the Cepo?he wonders PPI.
Meanwhile, daily purchases of the last 20 wheels are barely US$3 million. The balance for June was -US$47 million and the accumulated balance for July is US$137 million..
WAITING TO SEE IT: NO RUSH FOR THE ARRIVAL OF AN AGREEMENT
Regarding a new agreement with the International Monetary Fund, the Government shows willingness but does not end up shaking hands. By 1816, the President’s harsh criticism of Rodrigo Valdés, a key IMF official, “They seem to suggest that the Government’s immediate plans do not depend on a new program with the organization.”
Aware of the market’s expectations for confirming concrete progress in terms of negotiationsthe consultancy does not perceive “much urgency” to regain access to international credit, rather understands that the Government “He is comfortable giving time to time” and lets the results simmer over a low heat.
It is there, in the wait, where a yellow light comes on: the evolution of the activityIf patience is the strategy, a sustained and widespread rebound in activity will be key for 1816.
In this sense, the EMAE data had an ambiguous assessment. Although the economy grew 2.3% in May year-on-yearexcluding agriculture from the measurement the result would be a contraction of -5% in the same period.
DOUBTS ABOUT THE NEW MONETARY SCHEME
Last Tuesday, the BCRA announced the setting of a limit on the growth of the Broad Monetary Base (BMA) up to $47.7 billionequivalent to nominal levels of April 30. Setting the ceiling on demand confirms the strategy of turn the peso into a “scarce currency” within the framework of future currency competition.
Doubts about monetary policy are growing. Both 1816 and PPI agree on one point: setting the BMA does not imply controlling the quantity of money, because monetary aggregates are broader. That is, If there is demand for private credit, banks can sell LEFI, thus increasing the monetary base and M2 in pesos.
Furthermore, the lack of liquidity could lead to an increase in the interest rate, which PPI – and the business community, above all – understand as a high risk of cancelling out the incipient recovery of activity.It is also a political risk”, they add.
On the other hand, the concept of “weight as a scarce commodity” assumes as a correlate that The rebound in activity will come from our pockets. 1816 explains it more clearly: the economy is remonetized endogenously through savers and investors, both outside and inside the country.
HOW DID THE MARKET RESPOND TO THE LATEST MOVEMENTS?
“Still with doubts, the market continues to digest the announcements”, determines the company that provides corporate advice, Consultation.
The signature of Eduardo Costantini He highlights “concerns that are well reflected” in the reaction of the markets. “If the market had given full credibility to the announcements, we should see the exchange rate gap collapsing and breakevens falling very sharply. That has not yet happened or it happened very timidly.”, they warn from Consultatio.
Although the company assumes that the market “does not fully understand the Government’s approach”believes that there is no doubt that the monetary scheme has as its main objective lower inflation “assuming the cost that must be assumed” in terms of level of activity and accumulation of Bookings.
On inflation, the latest high-frequency inflation data from PriceStats are encouraging: 2.6% in its online CPI -which does not measure services-, but it denotes that The third condition for getting out of the trap – IPIM and core IPC running at 2% – is closer.
Source: Ambito
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