Assets are out of whack, everything suggests that in April the monetary policy rate will be above 80%. The advice is to take financing and become dollarized.
Journalist: How is the financial scenario?
-The government has inflation ahead of it in the month of March of more than 7.5% per month, the rates of the treasury bills for the month of April yield 7.2% per month, the future dollar in April versus the future dollar in March has a gap of 7.7% per month, with these numbers ahead it is impossible to leave the monetary policy rate at 6.5% per month, which represents 78.0% per year.
Q.: What is your prognosis?
-The monetary policy rate in April would be above 80% per year, in order to equate fixed-term yields with inflation, otherwise there will be an aggressive process of portfolio dollarization.
Q.: What is the target value of financial dollars?
-Taking the liabilities and reserves of the Central Bank’s balance sheet, they should be between $440 and $460. At current prices it is very good to collect dollars, especially taking into account the inflation that we will have ahead of us, the high fiscal deficit of the treasury, and the difficulty of the government to finance itself.
Q.: Has the government already made 4 exchanges?
-Correct, and now it will seek financing via the Sustainable Guarantee Fund, in combination with an offer of bonds in dollars to the market, specifically to the banks.
Q.: Does the exchange of bonds come out for the Sustainable Guarantee Fund?
-My impression is that it would end up being approved, and this would give rise to realigning the level of market rates. I think it is a scam for present and future retirees.
Q.: How do you see the rates?
-We would have to have a discount bill rate above the monetary policy rate, and both should be above the devaluation rate of the peso. For this to happen, we would need to increase the monetary policy rate from 78% per year to levels above 80% per year.
Q.: Recommendation?
-Varies, depending on who is reading the article, namely:
1) Get as much financing as possible, because in April the government has to combine interest rate rises and a readjustment to the rise in the official dollar (slight, but readjustment nonetheless).
2) For those who are placed in Mutual Investment Funds or fixed term, arbitrate a part to alternative dollars, or buy merchandise, inflation will be very high in the following months, there are no dollars to import, the merchandise will be scarce and the prices they will continue to rise.
3) Do not close the price of the exchange rate, since we can see a rise in the wholesale dollar at higher rates than those observed in recent months.
4) An additional refuge are financial assets, called negotiable obligations in dollars and shares.
Q.: How do you see the financial market?
-According to data from the Central Bank itself, the volume of rejected checks and the MEP dollar operation are increasing. In January, bounced checks amounted to $61,072 million, triple what was observed a year ago. The operations in Dollar MEP also increased by 3, which speaks of a greater demand for dollars in the market. There is less financing in cards, the rate is dissociated with what the consumer could pay.
Q.: What happens with the drought?
-We are observing a smaller amount of soybeans to be harvested and a low price, this may affect the export sector, we do not rule out a scenario of suspensions in factories in the future if soybean milling decreases. Be careful, the drought will end up affecting the urban sector.
Q.: How do you see the drop in GDP?
-I think we could be in a scenario of a drop between 4.0% and 5.0% of the GDP.
Q.: Did Macri get out of the candidacy for president?
-He did it on March 26, 90 days after the closing of the lists for the competition in the PASO on August 13. We start the scenario where expectations can exceed the real economy in the price of financial assets. The presidential campaign has launched, Together for Change gains centrality, we will see how it takes advantage of it in the coming days, and what reaction the market has. For a while we will stop talking about Javier Milei, we will see the counter-offensive of the libertarian and what position the Frente de Todos adopts. With this measure, Cristina should go to the pits.
Conclusions:
- We are going to a financial scenario where a rise in rates above 80% per year for the month of April is sung.
- Inflation will be higher and we are going to live for a long time with a final of 3 digits.
- The wholesale dollar could adjust at a higher rate than that observed in the last 3 months, which was December 5.9%, January and February 5.5% respectively.
- The rates of the discount bills for April are located at 129.1% per year, it is a nominal annual rate of 85.9% per year. They should be higher.
- Rate hikes should rearrange the price of alternative dollars, which at first glance should be above $400.
- The drop in agricultural raw materials, added to the scarcity in the quantities harvested, will bring less dollars to the economy, a shortage of imported products, more inflation and a drop in economic activity.
- The positive news is that as long as we do not get closer to the closing date of the lists on June 26 (90 days), we will have an impact on future expectations ahead of us, and that could energize the rise in financial assets.
- A dual scenario, the real economy is complicated, and financial assets could be on the rise. Obtaining financing in pesos and becoming dollarized seem like the best options. Options to invest? Only in private.
Source: Ambito
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