The first measure that the Government took on post-electoral Monday was put more stock in the financial dollar market that is under your control. Although the weekly business limit of USD 50,000 nominal (around USD 16,000 in cash) is maintained, they changed the way of calculating it and it is no longer a weekly net value because they prohibit doing more than one operation. Until that moment, an investor could buy and sell during the week by parking to take profits in dollars. Now limit those operations and of course it will make the demand for AL30D less. This bond is used by the BCRA to regulate the exchange market.
In fact, operations in this MEP dollar square fell almost by half and, with a slight intervention from the Central Bank at the end of the round, the amount of business was USD 17.7 million against USD 31 million last Friday . In this way, the MEP dollar closed $ 4.70 up to $ 188.78. That the BCRA let the dollar it controls rise 2.6% seemed a good sign of wanting to unify the regulated MEP with the free one. The market associated this policy with a prompt negotiation with the IMF that does not allow the exchange rate split.
The resolution of the National Securities Commission (CNV), which came about the closing of the wheel, defeated those expectations. Controls remain the only tool to control the value of the dollar and inflation.
Another data, which was not taken into account, was the reduction of the market because until the end of the month, banks are prohibited from increasing their holdings in dollars. The absence of them is an important piece of information.
In the GD30 market, where there are not such strict regulations, the MEP fell 90 cents to 197.6 (-0.45%). The cash with liquidation was the most affected and yielded $ 7.50 to $ 208.13 (-4%). But the news came from the side of the wholesale dollar that increased 6 cents to $ 100.20 to give a signal that the anchor is not only in force, but is more strict than before the elections because this devaluationCounting the days of the weekend, it is equivalent to 2 cents a day, against 4 cents last week. But everything has a price and the Central Bank had to sell USD 35 million in this place and the reserves fell USD 85 million to 42,522 million because it must return the temporary loan to the Bank of Basel, in addition to supporting a fall in the euro and the pound sterling by the revaluation of the dollar in the world.
The free dollar or “blue”, gave 50 cents to $ 199.50 because there was selling pressure from the overbought and fear that the strength of the currency has been diluted by the strong coverage in the week before the elections. The market had more dollars in its possession than it could bear. He had sacrificed positions in pesos that they needed to cover different needs, on account of a future rise in the currency.
Another important intervention was the one he made in the dollar futures market to reinforce the anchor. Although it has no rest, because it consumed a good part of the USD 6,500 million that the IMF authorizes it for this type of regulation, it became a seller in the key months that had very high rates incorporated into their prices. The November contract yielded 1% to $ 101.11. But that of December fell 1.73% to $ 105.30 and that of January 2.45%, to $ 111.88.
Bonds tied to the dollar (dollar linked)Sensitive to what is happening in this market, they fell more than 1% because there was also an exaggerated coverage in these papers. In fact, there was a move to cost-of-living-indexed bonds because they bet that inflation will be higher than devaluation. That is why the Boncer that expire in 2022 increased 1% and the TX23, 1.07%.
Debt bonds, which were at a very low and opportunity price, had rises and falls but the most important papers ended up with rises of just over 1% and made the country risk drop 65 units (-3.7%) to 1,683 basis points. Buyers are gambling to make big profits with these exaggerated papers if there is an arrangement with the IMF.
The parameter that brought more mistrust about what will come, was given by risk assets. In the Stock Market, where $ 2,346 million were traded, the S&P Merval, the index of leading stocks, lost 2.06%. The fall is worrying because it was with a high volume and the most affected papers were those of the banks that have their hands tied for operations in dollars.
For many, the fall in the papers of the entities was due to the fact that they were revalued against the return of the debt bonds and an adjustment was made between the two. The actions most affected were those of Edenor (-5.04%), Transener (-4.25%) e YPF (-4.11%). The banks BBVA and Galicia they had falls of more than 3%.
The ADRs – certificates of holding shares that are listed on the New York Stock Exchange – had a bad turn, but with a decrease of almost 40% in business compared to last week because fewer operations were made of the dollar counted with liquidation. $ 2,835 million were traded against $ 4,500 million last Thursday. The most affected certificates were those of BBVA (-3.26%), Edenor (-3.17%) and Globant (-2.66%). The best happened through Central Puerto (+ 4.89%), Free market (+ 2.26%) and Telecom Argentina (+ 2.25%).
What happened and what will happen are study rounds. The market wants to see in which direction the Government will advance and if it is indeed determined to close an agreement with the IMF in the short term. For that they have to know the economic plan that they promised to present.
The photo of the first wheel is better than expected. The film leaves open too many questions about the fate of the dollar and the ability of the Central to contain it if there are no prompt responses from the IMF. In fact, in the first round the stocks tightened, the exchange markets were intervened and the reserves fell further.