Next week’s economic agenda could be marked by the deepening of exchange rate policy. On Tuesday the December inflation and, if confirmed in the 2.5% zone, the Government will lower the crawling peg at 1% monthly. The market is betting that the measure will be accompanied by a reduction in the rate. Meanwhile, it was learned that the inflationary expectation for all of 2025 is 25.9%.
The slowdown of the crawling peg will be a fait accompli as long as the consumer price index (CPI) for December is 2.5% or less. This was stated by the president Javier Milei two weeks ago. In this case, the change in the movement of the dollar could be seen both at the end of the month and next Wednesday.
The market understands that it will be the next day that inflation is known, the day in which the Treasury will seek renew maturities for $1.7 billion.
In that sense, the consultant 1816 consider that when they lower the crawl they will also lower the rate, although in a proportion “considerably less” (around 10% or 15%, that is, between 300 and 500 bps from the current 32% TNA).
The IEB consulting firm casts a shadow of doubt on the possibilities of deepening the exchange rate dynamics. It is that the inflation in the City of Buenos Airespublished before the INDEC CPI, gave 3.3% and, doing the exercise of taking the percentage variations of the IPCBA and applying them to the CPI weights, projects that the inflation at the national level approaches more to the 3% zone.
The price variation in CABA was particularly driven by increases in services (4.2%), within which the increases in the insurance and financial services (5.8%) and services linked to restaurants and hotels (5.2%). On the side of the estatethe increase was lower (1.9%).
“If a variation of around 2.9% is confirmed, it could delay the reduction of “crawling“, given that the President has declared that to the extent that three inflation readings (CPI) around 2.5% are confirmed, the BCRA would reduce the pace of “crawling” from 2% to 1%,” warns IEB.
It is also true that starting in October inflation pierced the 3% floor, with a variation of 2.7% and in November 2.4%. Therefore, last month’s variation “could temporarily affect the slowdown trend“, although it is known that inflation in December is driven by a stationary effectl.
Just as or more important than the CPI projection is the behavior of the inflation expectationswhich can be followed through the REM (Market Expectations Survey), prepared by the BCRA.
In its recent publication of January 7, which corresponds to December, the expected inflation for that month is 2.7%a percentage that is only a few tenths away from the IEB estimate, and is above the national objective.
Regarding the year 2025REM expectations reflect an evident tendency towards inflation slowdown for the first months of the year, estimating it at 25.9%substantially below that recorded last year.
BCRA reserves: the market’s concern deepens regarding debt payments
Meanwhile, since Econviewsthe consulting firm led by Andres Borensteinpoints out that the current concern is that net international reserves remain in negative territory, with “very little room to face potential problems in the external sector”.
The situation of the Net RRII in Argentina is considerably different from other countries in the region such as Brazil, Uruguay or Chile where the reserves represent more than 10% of the GDP, which in the country would imply having, at least, some US$60 billionaccording to Econviews calculations.
At the same time, in Argentina around 55% of the debt is in foreign currencywith which the payments of interest and capital amortization services “They crucially depend on the Central Bank being able to obtain reserves to serve them”.
The projection of a deteriorated current account in 2025going from a surplus of US$2500 million still deficit of US$3,800 millionmakes the panorama more complex, since it would again imply depending on increased fresh financing so that the BCRA’s resources do not continue to decrease to the point of altering market confidence.
“On the one hand, it is clear that improvement is a process that takes time and the investors who ‘burned’ in the Macri government learned that it is necessary to wait for the process to consolidate. For now things are going very well and the outlook is promising, but “Argentina is usually a ghost train and when you least expect it, the ghost that scares away can appear.”concludes Borenstein’s signature.
In this context, the Government assured that it can complete without difficulties this year’s financial calendarbut 1816 warns that the payment of bonds, even with the arrival of the repo, will leave net reserves (discounting Bopreal flow at twelve months) at almost US$6,500 billion“unpublished since January 2024”.
The positive thing is that the “spectacular” rate of generation loans in dollars with a stock of US$10,800 billionwhich by regulation are settled in MULC, which impacts net reserves.
A variable that the market will not lose sight of in the coming months is the climate. The lack of precipitation in December and the first days of January They pierced the water reserves of the core area. Close monitoring will be carried out during the remainder of January and the month of February.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
