On the last day of March, The IMF approved the review of the goals of the agreement with Argentina corresponding to the fourth quarter of 2022. Keeping the fiscal targets for this year unchanged, the agency cut the Net International Reserves target for March by USD 3.6 billion, dropping from USD 7.777 B to USD 4.177 B. In turn, the target for 2023 went from USD 12.077 B to USD 10,277 M. Despite this “wink”, local analysts already estimate that the new goal for 1Q23 would be missed by almost USD 2,000 M.
Likewise, in the publication of the fourth revision it is observed that the IMF technicians slipped that the official exchange rate, in real terms, would be “appreciated” between 10% and 25%. Although the media commented that the government would have promised to accelerate the rate of devaluation to beat monthly inflation, this is still not a “quantitative goal” of the program to be evaluated to unlock future disbursements.
This was known on the eve of the announcement of a differential exchange rate of $300 for the soybean complex and for certain regional economies, effective until May 31 and August 30, respectively. However, together with the “reward” a “stick” was proposed: that companies that have not yet complied with the liquidation of their exports do so within a period of 30 days to avoid the suspension of their CUIT and maintain their access to the MULC. With the latter, the government hopes to get USD 3,700 M.
Both the vision of the IMF and the fact that the government is needing to resort successively to exchange rate incentives, leads one to think if it is not time for the BCRA to change the dynamics with which it works in the exchange market, be it an acceleration from the crawling-peg, a discrete currency jump or something else.
For now, everything indicates that the third alternative will be the one to be applied as many times as necessary. Considering that avoiding an exchange rate jump in the official exchange rate is the main political objective of the ruling party, we could infer that before resorting to a “discreet jump” they will continue to insist on schemes similar to the one recently announced. However, in the event that these incentives begin to be generalized for the different exportable products, together with the possibility that importables will also be affected by similar measures in the future, it is unlikely that an eventual transfer to prices will be avoided ( “pass-through”).
In turn, an additional risk goes through the “contractual”. Currently, it is valid to assume that the reference for importers, who are the main applicants for “coverages”, is the “A” 3500 of the BCRA. Naturally, this is the adjustment variable of the most traded financial instruments tied to the official dollar: on the one hand, the future dollar; on the other, dollar-linked bonds, negotiable obligations and notes (as well as the “dollar” leg of the dual bonds). Although numerous speculations can be made about hypothetical future differential exchange rates, it could happen that eventually the “A” 3500 loses its role as the main benchmark in foreign trade operations by including, for example, a tax on importers so that face a more depreciated effective exchange rate.
In this case, the hedgers who invested their pesos in dollar-linked bonds (assuming the risks of being public sector creditors) in order to obtain, at maturity, a certain amount of pesos equivalent to a number of “official dollars”. These, in turn, translate into a certain amount of importable products. In the event that these investors have to face an exchange rate that is higher but different from the “official” one, they will be unfavorably affected.
It is not improbable that, based on a hypothetical new exchange scheme, the titles linked to the “A” 3500 exhibit price variations. Despite this, given that in the context of stocks, futures represent expectations about exchange rate movements, it is clear that the market is less optimistic regarding the government’s ability to maintain the current speed of the crawling-peg. At the end of February, this market anticipated an advance of 6.0% and 6.9% in April and May, but as of March 31 these figures went to 7.9% and 9.0%, respectively. Now it only remains to be attentive to the imminent announcements about the exchange scheme that would allow contributing to the fulfillment of the goals with the IMF.
Research Team Leader of TSA Bursátil.
Source: Ambito
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