Sunday, April 2, 2023

Critical week for the dollar: what the market expects to change expectations

“Blue I don’t worry, because in the medium term it is arbitrage with respect to MEPs and CCLs. In the short term, it is tempered by the panic of retailers validating any price, but what you have to watch out for are the financials marking the dollar’s impulse of the market.“Economist Sergio Chouza said of Friday’s prices, where equities managed to ease – though to a certain extent – tensions. And some agents begin to explicitly assess that there was an overabundance in this increase”.

In the same line, the financial analyst at Wise Capital expressed Ignatius Morales In a recent report, “the parallel dollar is closely related to the exchange rate between BCRA liabilities and reserves. Today the difference between it and the CCL is 22%, so by this metric, at this level.” Similarities will start to become more valuable, Although that doesn’t mean they won’t continue to grow“, he warned.

For Camilo Tiscornia, director of C&T Economic AdvisorsThe present moment is of “too much volatility, too much panic and as we are seeing that the Central Bank (BCRA) does not have much firepower to intervene in the reserves. Also, due to the agreement with the IMF, It should not interfere with CCL directly range,

impact of new measures

This week, the body led by Miguel Pesce To try to stop the rise of the dollar took two measures. One, for foreign tourists and the other, on companies.

In communicating through this medium, Chowja admitted that he is “Isolated patch, not very effectiveIn this sense, the analyst assured that the decision aimed at facilitating the liquidation of foreign currency from foreign tourists “is one that is less likely to yield results.” He said that, according to his estimates, the flow of foreign dollars into the informal market is about US$3,000 million.” As for how effectively the banking segment that adopts this approach or the exchange rates will go, I think. It would be trivial. It is a solution that is welcome if they do it, but it seems to me that it will have little success.

On Thursday, it was also reported that companies that have access to the official exchange rate will not be able to register holdings of more than US$100,000 in Cedar. According to Chouza, the decision was aimed at “part of the corporate savings of companies that today convert other types of assets into dollars with these instruments that serve to finance the treasury or save the national currency. I think That there would be some disarmament, not much, and that it could serve as financing from the Treasury, even for a minimal fee”.


With increasing volatility, the tools to stop the surge are not many. This was confirmed by Camilo Tiscornia.“There are interest rates and trying to sell to tourists in the market. Trying to sell to tourists in the market, trying to force a greater supply of dollars into the free market, and also limit that Companies buy CEDARS that go for CCL. They go for regulatory side”.

“It will remain to raise interest rates as an attempt to keep them in pesos. What happens is that uncertainty also arises at this time, as the amount of money that has to be paid for Lilick also increases. BCRA is very limited, the situation is complicated. There is a lot of speculation and a lot of fear. in this scenario, strong decisions neededTiscornia explained.

“Not having dollars to intervene, not being able to raise interest rates much, needs a little more definition. It is seen that the basic problem is fiscal deficit and peso release. Peso excess is not being attacked , For this Attention is given to what Batakis can do, It’s difficult to control if there are no credible ads.”

what is coming

On the same lines as Tiscornia, the latest report of ecolatina It also focuses on the short-term picture. “We are in the presence of a scenario of greater fiscal austerity going forward: without a relevant margin to finance ourselves with temporary advances (even failing to meet targets with the IMF), financial The program will continue to rely heavily on loan auctions. For this reason, normalize as soon as possible, the financial front becomes even more important, and we will certainly see an increase in interest rates, which have been postponed.

“Finally, even if the economic program is redirected (BCRA re-accumulates reserves and devaluation expectations are dormant) The second semester will be with higher inflation, less activity and more stringent financial limits than the firstThis indicates that the financial/political/social balance will remain unstable. With less time to make real reforms that yield positive results, but still plenty of time to control costs, the current financial crisis is forcing the government to Stop prioritizing profit maximization to focus on minimizing costs, And avoiding devaluation of the official dollar will be at the top of the list of priorities in the coming days.”

Tiscornia concluded with a month-end tender with the Ministry of Economy on the sidelines. “The government has already achieved a lot in the last tender, but this is not the best time to go out and take the pesos. They will have to change things up a bit as the result may be bad and it may increase mistrust. We will continue to live in a more volatile environment until the government takes a clear decision.”

Nation World News Desk
Nation World News Desk
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