Bookings. As of October 22, they total US $ 43,038 million, if we discount the reserve requirements, loans and cash to face short-term payments, the net reserves total US $ 5,867 million, if we subtract the gold, we have US $ S 2,359 million. There are almost no reserves in the Central Bank, red light for this indicator.
High monetary liabilities. The monetary liabilities in the Central Bank are the sum of the monetary base plus the stock of lebac and passes. The monetary base amounts to $ 2,965,241 million, the stock of lebac $ 2,186,437 million and the passes $ 2,129,220 million. The debt in lebac and passes is higher than the monetary base and we qualify this as a red light for the market.
Debt in the Central Bank. The Central Bank debt is the sum of the stock of lebac and repo, if we mediate it in dollars it amounts to US $ 43,362 million, and is located above the stock of gross reserves that reaches US $ 43,308 million. Red light for the market.
Amount to be due in the future dollar market. In the Matba Rofex dollar future market, the amount of contracts to expire amounts to US $ 4,755 million, and represents 11% of gross reserves. From our point of view, when the amount of contracts to expire exceeds 10% of the reserves, this indicator begins to worry us. Let us remember that, according to the Argentine medical record, when the markets begin to show a probable loss for the State, intervention lurks. Red light for this indicator.
Dollar deposits. Deposits in dollars in the private sector add up to US $ 16,162 million, and register a fall of US $ 194 million in the last 30 days, this implies a decrease of 1.2% of the stock. We continue in green light, if we lose 3% of the stock we go to yellow light, and if it reaches 5% the red light turns on. The drop in dollar deposits will bring about a fall in reserves, since reserve requirements in dollars add up to US $ 11,529 million, and if there is withdrawal of deposits, reserves will fall, which at current levels look low. Dollar loans are very low.
Monetary issue. In the first 6 months of the year, the Central Bank issued at a rate of $ 55,000 million per month. In the 4 months of the second semester, it has been issuing at a rate of $ 200,000 per month. To all this, we must add that he paid interest that in the first semester amounted to $ 95,384 million per month. In 4 months of the second semester they would add up to $ 125,500 per month. This is another red light for the market.
Variation of the dollar and inflation. In 9 months, inflation was 37% per year, and in the same period the devaluation of the official dollar was 17.3% and of the blue one, 10.0%. For October, we estimate that inflation would climb to 40% per year, and that the official dollar and the blue would line up with a rise of 18.5% for the whole year. Clearly we are facing an exchange delay, which at some point would generate an external restriction, this implies fewer exports, more imports and a less favorable balance of trade. Red light for this indicator.
Balance of trade. This is a green light that I want you green, exports in the last 12 months total US $ 70,995 million, while imports US $ 57,982 million, this gives us a balance of US $ 13,013 million. This income of dollars is the most important in the exchange balance of the Central Bank, thanks to this surplus of 5 numbers we have the current level of reserves. What worries a bit is the trend, since in the last 12 months exports grew US $ 11,673 million, and imports US $ 16,992 million, this makes us think that the 2022 surplus could be lower. At this point we are fine, it is a green light, but we must monitor it, because the prices of the products we export have fallen, and the coming drought may return less quantities of the land to us.
Conclusions
- There are more red lights than green. This year we were saved by the good prices of the products we export, we achieved a large income of dollars, good collection of export duties, and this allowed us to maintain a respectable level of reserves.
- We are concerned about the great issue monetary that becomes an unwieldy liability in the heart of the Central Bank. This is the origin of the highest inflation we had in 2021.
- The dim, but worrying drop in dollar deposits of the private sector before the elections, is the indicator to monitor. This decrease in deposits does not imply that there will be a credit cut, since the dollars are mainly in the Central Bank to add reserves, what will happen is that the reserves will fall and this could change the level of the equilibrium dollar by the end of the year.
- Reservations are going to drop by December, we have many debt maturities, and there is a currency drain to intervene in the markets and keep the dollar stock market or MEP and the Spot with liquidation frozen at $ 180. It is the only price freeze that we see in the market, at the cost of losing reserves ranging from US $ 5 to US $ 20 million per day. From now to the end of the year, we could lose between US $ 200 and US $ 800 million depending on the degree of intervention used.
- The narrative used by the minister of economy worries since it has radicalized the discourse, and an imminent agreement with the IMF.
- The concerns expressed in this note are reflected in the rate of return of the Sovereign bonds. The sovereign bond maturing in 2030 under Argentine law is worth US $ 35.88 on the market at a parity of US $ 100.00 and its rate of return is 22% per year. With such a yield, there is no queue of investors to buy it, rather they buy it in pesos and sell it in dollars to collect banknotes, the bond is a hinge to make the foreign currency tangible.
- Elections and the end of an economic plan that has not worked, puts us in the prelude to a change in the monetary and exchange plan, the challenge will be if they do it in December or in the first quarter of 2022. The plan expired, we only need to know when they do the restyling .
