It was a rare week for the markets, dominated by the constant rise in the variants of the dollar “counted with liquidation”, already clearly above $ 200, and the blue dollar, which for the first time reached that price and closed on Friday at 199 pesos. The rarity was that, As a result of a new return by Turkey to the foreign exchange market, which consisted of prohibiting banks from increasing – at least until the end of the month – their general exchange position, the BCRA ended up buying USD 210 million and, for the first time in almost two years, the official wholesale price of the North American currency fell two cents.
A whole message to the market from the president of the BCRA, Miguel Pesce, and the Minister of Economy, Martin Guzman, who reiterates before each microphone that is put in front of him that there will be no devaluation, although analysts, investors and the general public doubt that exchange rate policy can sustain a rate of devaluation so below inflation and an official price so below exchange rates long after the legislative elections of November 14. officers, with whom the gap is already 100 percent.
Even so, the head of the Central and the minister are betting on reversing the expectations of devaluation, whatever the outcome of the elections. A promise that the market, judging by the prices, does not see feasible.
The point is that at the end of the week the BCRA received USD 290 million in funds from the World Bank, the Inter-American Development Bank (IDB) and the Andean Development Corporation (CAF) that offset the impact on the reserves of the payment of interest for USD 390 million of interest to the IMF. Even with that income and with the purchase of dollars generated by the new version of the stocks, Reserves closed the first week of December at USD 42,785 million, USD 31 million below the end of October.
“During the day, the strong demand from importers was still present but was offset by supply given the limits imposed by the BCRA on the net Global Position in foreign currency of the financial system, which allowed greater coverage by exporters, in a wheel where about USD 650 million were operated ”, they specified from the monetary authority.
The week that begins, however, will be the one of the most intense electoral run-run, when political pulsations accelerate and financial movements become more brutal. In fact, the Market Expectations Survey (REM) released yesterday by the BCRA specified that the average of forecasts surveyed shows that the year will close with 50.3% retail inflation, 2.1 percentage points above the previous month.
Demand continues to dominate the informal dollar market, whose price of $ 200, a barrier that, in any case, has already long exceeded the dollar implicit in the Global 30 bond, in principle not reached by BCRA operations to contain the exchange gap : the purchase of the bond with pesos and its subsequent resale in dollars yesterday yielded a cost of $ 214 per dollar, $ 6 more than at the end of Thursday, while the MEP dollar – local version of the CCL in which the currencies bought and sold do not come out of country, it was $ 205.
These quotes, however, are not the only ones on the market. The Central intervenes actively, selling reserves, to maintain two financial prices below the market value: the dollar counted with settlement and MEP implicit in the AL30, which yesterday were trading at $ 184.44 and $ 182.83 respectively.
The backwater on Friday does not ensure tranquility. “In the context of the current uncertainty facing the final elections, the demand for exchange rate hedging remains firm”Said a report by Portfolio Personal Inversiones. In fact, although it fell slightly, the country risk, a measure of (mis) confidence arising from how much an investor is willing for a promise to pay from the Argentine government, stood at 1,733 points,
Gustavo Ber, head of the homonymous study, highlighted that Argentine assets, including ADRs, fail to match the moderately positive tone of Wall Street, which explains why the S&P Merval remains stable, “with the greatest pressure concentrated on bank ADRs, while operators continue to undergo a selective correction after promoting another “electoral trade”.
The dollar prices of the bonds, Ber said, are also shown on average relatively neutral and with technical positions that deny the threats of a rebound.. “Domestic assets are no longer able to accompany, not even the ADRs that were the vehicles used by operators in search of promoting another” electoral trade “, as they had promoted before the PASO ”.
It is clear, with the days of the elections, caution gains space: investors want to know what the ballot box will throw and, even more, what political reactions they will generate.
According to Ber, in order for the Government to reach an agreement with the IMF that will serve as an anchor to expectations for 2022 and allow it to begin to correct economic imbalances, a political consensus is essential “and it is not yet clear whether the main political forces will be able to reach it by in order to avoid further damage and a possible crisis ”.
The macro context
The macroeconomics does not help to calm the spirits. As pointed out by a report by the consulting firm Equilibra, monetary policy is going through the two-month period with the highest issuance needs of the year and is tightening in two ways: the issuance of Leliqs and repo by the BCRA, and higher interest rates in Treasury bill auctions , which already exceed 48% of the Annual Effective Rate (TEA) at a 3-month term.
In addition, the consultant pointed out, “The demand for exchange coverage is on the rise; Given the yields of the dollar bond linked TV22 and the adjustable letter by CER X18A2, both maturing in April, for an investor to be indifferent between these two instruments, the official exchange rate should advance about 5 points above inflation between November and April”. An assessment far removed from the official action on Friday, with the drop in the wholesale exchange rate.