Waiting for news about the agreement with the IMF, uncertainty seized the markets. The problems intensified in the last wheels and the tension advanced on the dollar. In the official segment, the BCRA accumulates in March substantial sales days for the first time in many months (US $ 470 million) and the quotes of the futures contracts express fears regarding an devaluation of the official dollar.
Loans in foreign currency, which supplied the official market, interrupted their dynamism since the end of February. In turn, in the parallel market the quotes operate up despite accumulating days of strong official intervention.
Far from offering solutions on an uncertain exchange scenario, the novelty of an agreement with the IMF of uncertain content promoted the wave of distrust. We identify three reasons that explain the situation.
First, agreements with the IMF are first and foremost a sign of economic weakness. Countries resort to the Monetary Fund when they are in trouble and the announcement is perceived in markets as a confession of guilt.
In the Argentine memory the result of the 2018 stand by is still fresh. The monumental loan that the Macri administration assumed was called to reassure investors. However, it ended up accelerating the disarmament of financial positions, enhancing the devaluation and required a rapid review of the program that also included a self -criticism of the body regarding its ability to twist financial pessimism.
The current agreement that is negotiated does not seem to be an exception. The announcement “reveals” (paraphrasing to spokesmen of the ruling) a weakness on which from CP consulting we have been insisting for a while. Despite the oxygen of foreign exchange that money laundering offered since the end of 2024, the 2025 exchange programming presented a significant dollars for which there is no financier yet.
Second, there are indications that assume that the option for the IMF was not the “plan A” in the official road map. The disagreement between the fund and the government regarding the design of the exchange policy is known and the agency took care of making it explicit in its reports. Meanwhile, Argentina does not have capital maturities with the fund during all of 2025 there was the possibility of traveling the year regardless of an agreement with the agency that would leave the economic team with the hands free in the transit to the elections. In fact, in the final stretch of 2024 (and in full financial exuberance), the officials indicated that they would only negotiate with the fund if it adapted to their needs, otherwise they would dispense with the body.
International financial complications modified the scenario and made the Government more difficult the search for alternative financiers for the missing dollars. A country risk that reversed part of its setback and failed to return to the minimums of the late 2024 illustrate the change of context. Argentina must now resort to a lender capable of imposing conditionalities of economic policy, who made public his criticisms of the current exchange scheme and that, although he admits to be tolerant in the electoral year, will impose earlier than later his guardianship and conditionality.
Third, the fragility assumed by exchange dynamics from the irruption of money laundering should be mentioned. The dollar market is extremely dependent on private indebtedness and Carry-Trade strategies to achieve a positive result. These cycles are usually volatile and very sensitive to the news that impact on macroeconomic variables. An uncertain agreement implies possible corrections on exchange policy or interest rate that affect financial business equations. Given this scenario, better disassemble positions, reduce risk and wait news.
Thus, the novelty of an agreement with the IMF brought with it two certainties and a threat that begins to complicate economic management. First, it reveals the existence of a missing dollars for 2025 that for months went unnoticed in the midst of financial euphoria. Secondly, it implies that this missing will be financed by a creditor who will take corrections on the economic scheme sooner than early.
Finally, for a exchange scheme dominated by short -term private indebtedness, the reversal of financial expectations can be critical and can even aggravate the missing currency projected. This is the main threat that the new agreement brings with it and that could even materialize with initial conditionalities.
The initial market reaction is not very encouraging, while the results allow specular with the disarmament of Carry-Trade positions that have been providing currency offer and begin to be reversed. Even in a context of strong fiscal discipline, the perspectives of modification on exchange and monetary policy configure a factor of uncertainty that could even aggravate financing needs for the year.
CP Consultant Directors
Source: Ambito
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