The government loses reserves, and issues to finance public spending, an explosive cocktail for a financial scenario caught with pins. Dollar alert.
The rate set by the Central Bank at 78% per yearleaves you the fixed term at a rate of 6.5% per month, while inflation is at 6.6% in February, and everything suggests that in March it will be around 7.5% or 8% per month .
There is no rate in the market that repays this higher inflation, except to buy securities or a fixed bond adjusted for inflation, which with a certain delay copy the course of the highest prices in the economy, the price index is announced in the middle of the month, since from there, for 30 days, the update of the new inflationary index runs.
The increase in the interest rate from 75% to 78% per year will not be able to combat the highest inflation in MarchIt is neither chicha nor lemonade. A rise in rates without complementary policies such as reducing the fiscal deficit or raising reserve requirements does not help the economic scenario at all.
Reserves are around US$37 billion, of which very few are liquid. Monetary liabilities for the end of the month would be around $17 trillion. The equilibrium dollar could be between $420 and $440At this rate, buying the MEP dollar at around $390 seems like a good deal. It was much better when it was at $350 for a long time, but many believed Sergio Massa and made fixed terms in pesos.
The fixed term is a figure in extinction, the government bills yield much more than a fixed term, they are easy to acquire at the bank or in a stock broker, and they can be purchased at terms of less than 30 days.
The fixed terms in pesos at a variable rate or adjusted for inflation, were left with very low rates next to what the State offers. Banks lend most of their money to the State, making a fixed term or lending to the national State is practically the same.
Total time deposits in pesos sum $9.5 trillion and in dollars US$4,078 million, the sum of both measured in pesos amounts to $10.3 billion. The stock of remunerated monetary liabilities of the Central Bank (call it leliq and passes) total $11.3 trillion. This implies that time deposits are committed to the liabilities of the Central Bank. We are baked.
conclusions
- We have a manifest weakness in reserves, a very low harvest perspective, and very high monetary liabilities in pesos. This all leads to a combo where it is very difficult for alt dollars to stay below the 100% gap.
- The alt-dollar price target for the end of the month should be around $420-$440. There is room for further upside, especially as many investors will exit peso positions to begin the dollarization process.
- This week we will closely follow the motto the worse the better. While the situation tells us that the economic scenario is worsening, many investors go out to buy dual bonds, dollar-linked bonds, and negotiable obligations, under the premise that a short-term negative economic scenario affirms the possibility of the opposition coming to power. , and a reversal of economic expectations.
- We do not see any possibility of inflation returning below 100% per year. Neither is it that the dollar remains below $400 for a long time. Quite the contrary, we see a scenario of acceleration in the inflation rate and consequently a dollar at higher levels.
- The lack of dollars will cause imports to decrease and this will affect economic activity, we will enter a crazy scenario where nobody wants to sell more than is fair and necessary given the possibility of not being able to replenish merchandise.
- The international context does not help, the price of oil and agricultural raw materials decreases, we do not see a collapse, but it will be difficult for them to rise in the next 45 days. There is plenty of soybeans from Brazil, there is abundant corn on the market, the effect of the war on wheat is over, and in terms of oil, the OPEC countries do not stop pumping. Complex scenario.
Source: Ambito
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