Dollar in the sights and strong coverage: what does the City expect after the agreement with the IMF

It will be a day marked by transcendental decisions. This Friday, the new course of the monetary and exchange policy that Argentina agreed with the International Monetary Fund (IMF) within the framework of the extended facilities program. The new treatment, which enables a credit for US $ 20,000 million, is emerging as the pillar to accelerate the CEPO LIFTING exchange and adjust the monetary regime, in a context of growing volatility by the commercial war and devaluative expectations exposed in the behavior of the future dollar.

Official sources indicated Scope that, although formal communication is still pending, The new scheme will contemplate important modifications in the exchange rate structure. Among the most debated measures is the elimination of controversy “Blend dollar” – always questioned by the fund analysts for their fragmented character – and the possibility of adopting a system of bands with a controlled flotation mechanism. This adjustment seeks to balance the interests of exporters, which today receive an additional 5% by the financial dollar channel, and the imperative need to allow the Central Bank to accumulate sufficient reservations.

The future dollar anticipates a devaluation

The expectation of these changes adds to the pressure exerted by the financial market, which is already evidenced in the behavior of the future dollar. During yesterday, this instrument, which functions as a mechanism of coverage against devaluation, registered a rise close to 6% for the end of the month, located at $ 1,190which would represent a 10% increase compared to $ 1,077.50 of the wholesale dollar.

The new agreement with the IMF not only implies the injection of resources, with a potential disbursement of up to 60% of the total loan (according to government expectations), It also entails conditions that require a structural transformation. The authorities must take measures that, in addition to facilitating the flexibility of the stocks, allow to improve the capacity of the Central Bank to generate reservations in a scenario where, despite the solid commercial surplus, the net reserves remain around AU $ S5 billion.

Iván Vizental, strategy leader of Fifth investments, analyze in dialogue with Scopethat after knowing that Argentina reached a technical agreement with the IMF “The exchange coverage demand was shot“. The strategist explains that investors speculate with a possible review of the ‘CRAWLING PEG ‘at 1% monthly and of the scheme of “Blend dollar “which is reflected in the rise in the price of dollar futures And the greatest demand for instruments “Dollar Linked and the pressure on the official market “.

And although the government denied changes, the lack of clear signs of the IMF feeds these expectations, says Vizental. “Coverage is also manifested in a Jump in the implicit rate of futures (from 24.5% to 85% TNA) and on performance Negative of the Linked dollar bonds “, indicates.

Despite this, Vizental slide that coverage No It is still generalized: “The treasure managed Expected inflation (from 1.7% to 2.7% monthly by 2025)which particularly affected the Lecap curve. “

The analyst concludes that the agreement with the IMF could reduce uncertainty, but urgent to which the rules of the new exchange scheme are defined soon To avoid More speculations that damage financial assets and reservations.

Leonardo Anzalone, Director of Center for Political and Economic Studies (CEPEC)explains in talk with this medium that, what the dollar futures expose is a growing expectation of exchange correction “In the very short term“, consisting of what could be announced this Friday.” The jump in the implicit rates of the April and May contracts – with the top level of 100% TNA – reflects that the market discounts a devaluation of the order of 14% in the next 30 or 40 days. It is no accident: it coincides with the expectation of a new understanding with the IMF “.

Anzalone applauds that the government raises in its position that it will not devalue: “It does well to hold that speech, but the market no longer believes.” And it is that the reserves remain at very low levels, the “crawling peg” runs behind inflation, which is increasing, and the pressure on financial dollars intensifies. “In this context, it is natural that agents seek coverage. And futures are thermometer to that tension,” says the director of CEPEC.

Is the stocks up?

In statements to this medium, Gustavo Quintana, From PR operators, he considers that there will be no modifications immediately. He argues that, “as announced by the Minister of Economy, Luis Caputo, to raise the stocks, certain conditions have to be given” They prevent them from doing so in the short term.

Quintana acknowledges that many speculate that this Friday’s announcement will be followed by changes in the structure of the exchange market, which for him is not possible in the short term. “Elimination of the” Blend dollar “would mean an adjustment of the exchange rate to compensate for the drop in the price of exporters. Flotation between bands? It is all speculation without certain bases so far. You have to wait“, he indicates.

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Anzalone, meanwhile, rules out “An abrupt devaluation, but a change in the current scheme“As it comes, the situation does not work for anyone, inflation increases, they do not meet reserves and the production falls, says the economist.” The IMF may not ask for a discreet leap, but a ‘crawling peg’ more accelerated or even a flotation band. The point is that the official exchange rate cannot be still late without consequences, “he says.

Thus, Anzalone explains the movement in the Matba Rofex: “It is not so much a bet, but a coverage in front of a scenario where the government, sooner rather than later, You will have to correct“