Exchange tension: doubts in the market, waiting for definitions about the dollar and the “mana” of the IMF

The uncertainty about the exchange scheme and the statements of the Minister of Economy, Luis CaputoThey generated a week of high volatility in the local financial market. With a Central Bank (BCRA) that he sold US $ 1,148 million In the single and free market (Mulc), a fall in reserves, a cimbronazo of the Mervala decline in sovereign bonds and an increase in country risktension was felt strongly.

What is spoken in the market – because the government still does not disseminate the fine details of the agreement for which it achieved guarantee in Congress after the DNU that enables the negotiation is approved – is of a definition of the exchange rate, if there will be free flotation but with bands so that the dollar does not exceed the planned limits or upwards not down.

While an adjustment in the medium term was predictable, the market reacted negatively to the lack of confirmation on the continuity of “Crawling Peg “the gradual devaluation mechanism. This uncertainty led to a disarmament of positions in pesos and a greater dollarization of portfolios, affecting exchange and financial stability.

International factors and adverse local context

Beyond the contradictory signals of the government, volatility was also driven by external factors. Global markets are going through a period of high uncertainty due to geopolitical conflicts, expectations of economic slowdown and changes in the monetary policy of the US Federal Reserve (Fed).

On Wednesday, the FED maintained its reference rate in 4.25%-4.5%but adjusted down its projections of economic growth (of 2.1% to 1.7% for 2025) and raised inflation and unemployment expectations. In addition, it was confirmed that in the coming months they are expected Two cuts In the reference rate, which could impact emerging markets, including Argentina.

Dollar Blue Suba

In the week, the Fed maintained its reference rate at 4.25%-4.5%.

Depositphotos

At the local level, the External sector also showed worrying signs. In February, the commercial surplus was barely U $ 227 millionwell below US $ 1,450 million registered in the same month last year. Imports grew 42.3% year -on -yeardriven by a jump from 55.4% in amountswhile exports, although they maintain a positive trend, reduced their growth rate.

Market reaction: dollar, bonds and fall actions

The impact of exchange uncertainty was quickly reflected in the markets. Future dollar contracts registered strong increases: that of April reached $ 1.135 and that of December $ 1,367widely exceeding previous expectations. The price curve shows a growing divergence with respect to the “crawling peg” of the 1% monthlywhich shows the lack of confidence in the strategy of the economic team.

The Linked dollar bonds, highly demanded as exchange coverage, experienced a strong fall in their yields. He TZV25for example, went from a performance of the 10.8% annual a month ago to -4.3% on Caputo’s announcement.

The dollar bonds, meanwhile, fell 2% on Tuesdayalthough they recovered part of the losses in the weekly closure. In parallel, the country risk reached 787 basic pointsbefore going back to 762. The index Mervalmeasured in CCL dollars, fell 5.8% on Tuesdayalthough he showed some recovery in later days and ended with a slight rise.

Perspectives: uncertainty and need for definitions about the dollar

This week’s episode revealed market sensitivity due to the lack of clear definitions in exchange matters. Uncertainty about the future of devaluation schemeadded to an adverse international context and a weakened commercial front, generates additional risks for economic stability.

In this scenario, investors will be attentive to government signs and the evolution of negotiations with the IMF. Without a clear and predictable scheme for the exchange rate, volatility will continue to mark the rhythm of the Argentine financial market.

“At 16 a Bloomberg was published in Bloomberg News that on Tuesday an informal meeting with the IMF would be held to discuss a loan of US $ 20,000 million for Argentina. Rare that after this news, the market paid bonds in dollars and the dollar began to loosen, because it is more or less what was being handled. We will see if next week there are more news, “he said Nicolás Cappellato invest in the stock market.