The market already speculates a price of $ 1,250 – $ 1,300. The problem will continue to be the rate in pesos.
Finally, the agreement with the IMF came, and the ads were not delayed to appear. At 16 on Friday we met the inflation data, and with this one a bad news, since it reflected a strong upward rebound: 3.7% vs. 2.4% in February. However, although it happened just Friday, it seems to have been far in time. With the run of the week, the rumors in the market on the lifting of the stocks were taking impulse. The futures market put a dollar prices at $ 1,197 for the April contract, the exchange rate counted with liquidation collapsed from its $ 1,400 peak to close the week in the $ 1,340, and the financial assets flew waiting for advertisements before the closing of the wheel, leaving the country risk in the area of the 874 points. After the long -awaited lifting of the stocks, the new question that lies is: What will be the price of the currency?
Chord, to the new measures, the bands establish a $ 1,000 floor and a roof of $ 1,400. The market already speculates a price of $ 1,250 – $ 1,300. The problem will continue to be the rate in pesos. With a rate of 2.5%monthly, and under a context in which the exchange rate (CCL) could rise a maximum of 4.48%, but with a potential fall of up to 25.37%, the most efficient strategy begins to be evident. Certainly a fall more similar to 6.72% could be estimated (taking the dollar to $ 1,250), in just two and a half months a dollar position could be covered in the event of an eventual loss. Even in just two months, the performance equivalent to the maximum “upside” projected would be reached.
So what can we conclude? For those who today have a MEP or CCL dollar, the best alternative is to disassemble these positions and move on in pesos. We are likely to observe a strong flow of dollars channeling towards foreign currency financing tools.
The government already clearly raised the rules of the game, even shouted in a loud voice: it is willing to intervene strongly. The landing of a significant amount of dollars could stop any escalation attempt above $ 1,400.
New exchange rate: the bid between importers and exporters
Passing clean, the arrival of US $ 15,000 million by the IMF, US $ 6.100 million of international organizations YU $ S2 billion corresponding to a new repo with private banks, not to mention what can be known in the next few days on the direct additional aid of the United States with an extraordinary disbursement.
So this Monday we should see casualties of the types of financial changes converge with a rise in the official exchange rate, with importers trying to make as many payments possible and exporters waiting to see at what price the currency is balanced. I don’t think the market tests the upper band announced by the Government, although where there can be news is at the interest rate. Although the objective of the government is to control the amount of money and not the rate (worldly trilema – Fleming), it is possible that in the short term so that the variables of the economic plan are aligned, generate a rise in rates in pursuit of creating incentives to investors and savers to stay in pesos. The bid between exporters and importers will be interesting to place the new exchange rate which will float from now on but that, as of this Monday, it raises a novel starting point. Recall that the bands will adjust a 1% monthly, as of May. Finally, the fact that the government will be monitoring is the country risk, which expect to converge to the area of the 500 points by raising a very important “upside” of the dollar bonds. In addition, with the free mobility of capital, we will see how risk ratingers raise the valuation of the Argentine credit character, which will accelerate the opening of the markets for the “Roll Over” of face debt forward.
* Bull Road Investments Co-Founder
Source: Ambito
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