For Miguel Kiguel’s consultancy, the market does not see a way out of the restrictions this year

A quiet week for the dollar, and one could say for Argentine assets, has come to an end. And it is thanks to the exchange controls, since there are no large leveraged investments in this market at a global level, The local market did not suffer the consequences of last Monday’s financial crash. In this context, the latest report from the consulting firm Econviews which is run by the economist Miguel Kiguel He left some predictions about the cepo, the inflation of July, the counted with liquid and his view on the possible recession in the United States.

Regarding the cepo, the consultancy maintains that “the market does not see an exit from the cepo this year or, if it does, but with unification at nominal values ​​much lower than those that would be unified at present.” Kiguel’s position on this matter is that “The scenarios that the market sees are clearly plausible, but there are othersThe idea that if the exchange rate is lifted, the dollar will fly seems to us to have little basis, especially if the exchange rate is lifted with some restrictions on the banks’ exchange rate position and dividends.”

And he adds that “If this idea gets on the government’s radar, it could try to open the currency controls earlier and that would balance the exchange rate a little with relatively little inflation.. The government would unify with a program and months of surplus behind it.” It happens that dollar futures have been falling in recent days and that may imply that the market does not see a way out of the restrictions.

It is worth remembering that the devaluation expectation in the future dollar in the curves of the Electronic Open Market (MAE), shows that the curve shifted downwards in the midst of days of high volatility in the global market. The short section of the future dollar curve is located at 40%, below the 43% TNA at the beginning of the week. Meanwhile, the middle section of the future dollar curve shows rates of 43%, below the 45% (TNA) at the beginning of the week.

July inflation

Inflation in the City of Buenos Aires accelerated to 5.1% in July and reached almost 100% for the year. It is worth remembering that the data serves as a barometer to anticipate the figure that INDEC will release next week. For Econviews, July inflation closed well, “probably a low 4.”

He argues that the July data “for most measurements closed below June (4.6%) with the probability that, As the government said, it is the lowest of the year”However, for this to be the case, the figure would have to be lower than the 4.2% in May. Some even go below 4.

“We have doubts about these numbers because of our measurement of food, the most important sector of the CPI, which rose mainly due to a climate issue at the beginning of July. It has nothing to do with the inflation trend, which is clearly better than we expected a few months ago. The exchange rate anchor generates other problems, but it yields results in what is priority 1 for Milei’s management,” says the consultancy.

“We don’t see a recession in the United States”

According to Kiguel’s consultancy firm, US activity is not going into reverse. “The most likely scenario is a slowdown. The employment data for July was poor, with less than half the job creation than in previous months. But the economy does not seem to be going to collapse completely.”

“It is clear that the pace at which it was going could not be maintained and that there will surely be rate cuts next month, although we are not sure if they will be 25 or 50 points. The impression is that the United States will continue to grow above the Eurozone, but more slowly than until now. The recovery of the markets in these days also takes out of the picture a large “poverty” effect of households that could consume less given that they are less wealthy than they thought,” he concludes in this regard.

“We don’t see the CCL at $1,100,” as Caputo indicated.

Kiguel’s view is that the gap at the current level is correct. “We see that it can go up or down 5 points. We do not find any reason for the dollar to fly, but we find it difficult to see the dollar at $1,100, As Minister Luis Caputo said, “It is clear that the role of the authorities is to work with expectations, to which is added the need to open the currency exchange controls with the lowest possible inflationary cost.”

He also argues that the whitening will have a positive effect on the gap, “but we are not sure it is so significant. In any case, at 1,100 pesos we see more buyers than sellers unless the rate goes up,” concludes Econviews.