The Ministry of Economy and the Central Bank announced measures that allow natural persons to buy dollars legally. A 10% devaluation and an increase in the offer of dollars are expected.
Last Friday, the Ministry of Economy and the Central Bank announced a series of measures that mark the beginning of a New stage for the Argentine exchange market.
As of Monday, natural persons can legally buy dollars again, with operations that will move between $ 1,000 and $ 1,400, with a monthly update of these 1% bands. In practice, this represents the End of exchange rate For future flows.
Our analysis indicates that the market anticipated a 10% devaluation for Monday, reflected in the ROFEX futures curve for April. This would locate the official dollar in a range of $ 1,100 to $ 1,200, a level consisting of the Blend exchange rate last Friday (composed 80% per dollar Mulc and 20% per dollar MEP) that gave approximately $ 1,142. That figure, together with the roof we saw in Rofex ($ 1,190), marks the reasonable limits of the new exchange balance.
The key point is that the demand for dollars will not be aggressive: It will be concentrated in importing MSMEs, actors with less specific weight. On the other hand, the offer will grow strongly for two reasons: the agriculture will stop operating with dollar Blend (80/20) and will begin to liquidate 100% to the MULC, and also an income of capital from the outside gradually, attracted by the lifting of the stocks and the greatest exchange predictability.
In parallel, 30% surcharge persists on the dollar cardwhich will generate an incentive for some users to buy dollars in the official market and avoid that cost in their consumption abroad during Holy Week for example.
The most relevant announcement is financial support: The government has US $23,100 million to face any tension in the exchange square. This, together with the improvement in the fiscal and external front, places the country under a “great umbrella”. In fact, the Executive has a margin of up to 30% for an eventual devaluation if there were external shocks.
Together with the first IMF disbursement (US $ 12,000 million), plus loans announced this Saturday by the World Bank (US $ 12,000 million in 3 years) and IDB (US $ 10,000 million in 3 years) the economic team and the BCRA have the necessary ammunition to deal with external and internal cimbronazos that may affect the economy and push the type of change from $ 1,090 to $ 1,090 to $ 1.090 to $ 1.414 (which would be the $ 1,400 +1%band).
How does this impact the capital market?
On Friday the Argentine ADRs closed positive reaching up to 8% and in the post market, after the announcement of Minister Caputo, they continued to rise another 10%. The wheel is expected on Monday to open very positive for the Argentine Equity, mainly the actions of the bank segment. If we look at the Argentine fixed income segment, the bonds are delayed and should be compressing at 10%. This means that – in the short term – we see a potential considerable rise in the middle part (GD35, AL35) and long curve (GD46).
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Source: Ambito
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