Tuesday, March 28, 2023

Doubts about battery of measures to prevent dollar crisis: why markets expect more pressure

A battery of measures announced this Thursday, including facilitating the liquidation of foreign currency from foreign tourists. dollar blue and financiers is “completely insufficient” to defuse tensions in the exchange market, According to the judgment of market analysts.

In addition, the BCRA this Thursday issued access to the foreign exchange market for payments for imports of production inputs that had left the port of origin before June 27, and limited holdings. Cedar For companies having access to the official forex market.

However, following the known announcements in the afternoon, blue continued to climb and closed at a record price of $337, showing a daily jump of $20 and rising to $99 in July, while the gap with the official wholesale dollar widened to 159.3% . , the highest level in 40 years.

In one frantic day, even financial dollars burned. counted with liquidation peaked at $340, although it eventually closed at record highs $334,16 while the dollar MEP ended in $322,49

In this regard, one broker said that on behalf of the government “they went out to sell bonds to lose the dollar.”

In turn, economists believe that “It is insignificant” the amount that the dollar can contribute to foreign tourism to strengthen reservesOnes of Banco Central QueSo far this week, it has accumulated a net sales balance of US$380 million in the official foreign exchange market (MULC) and added a red of US$980 million in the year.

In the city they warn that “it’s a bull fight“, they say that the mistrust that exists is due to fiscal and monetary fallout, which is why They do not believe that pressure on the alternative dollar will stop until concrete accommodative measures with political backing are in place

Limited to CEDEARs: What will be the impact

During Thursday afternoon, the BCRA added another measure: Decision to incorporate the tenure of CEDEAR –Argentina Certificate of Deposit– In the availability range of US$100,000 that companies that have access to the official forex market can have.

It was also established to include devices that They cannot be traded for 90 days before or 90 days after official market access.

Seeders are financial assets with local operations, representing shares of companies listed abroad, traded in both pesos and dollars, and are vehicles that both savers and companies can convert their portfolios (adjusted by dollar CCL) into dollars. to use.

on the effect of the remedy, in gold price he predicted “This could lead to a greater degree of uncertainty and exchange panic for the day this Friday”

Tomas Ruiz Palacios Consultio Plus analyst commented that “this thing about CEDEARs It’s not going to fix any alternative dollar demand problem.But on the contrary, it is showing a very bad sign that they are not able to control the situation”

“I don’t see anything good in it, either they find it difficult to estimate the magnitude of the crisis or they are confused how to deal with it, because they pit about the structural problem more than all the measures being taken. are,” he shouted.

Emiliano Anselmi, The PPI analyst agreed that “this is a bad move.”

“We will have to wait for the circular to be read. The idea will be to force companies to sell CEDEARs, which Will temporarily dismantle the CCL, But what will the companies do with those pesos? Look for dollarization where they can, for example blue, Because the extra weight is still there,” he explained.

for its part, Sebastian Menescaldialso said that “it is necessary to see first how the regulation is going to be implemented, but what is the reason why companies can’t dump their surplus into CEDEARs and try to make dollars, which would mean That the demand for these is going to fall sharply. Titles that were growing strongly”.

“If they have to get rid of all the titles they have, they are going to collapse the financial exchange rate,” he speculated.

At the same time, Juan Pablo Albornoz, Ecolatina, the Economist, criticized that “it shows a total incontinence between the National Securities Commission (which approved 16 new CEDEARs less than 2 weeks ago) and the BCRA”.

“It will probably bring More uncertainty in pricing strategies and greater exchange rate pressure”Prediction

Tourism Dollar: Homeopathic Remedy

Paul Repetto, The head of research at Aurum Valores assessed that “the effect of the measure on tourism is Insignificant in terms of foreign exchange earnings that can be obtained, possibly around US$80 or US$100 million per month In an optimistic hypothesis, but as an indication of the critical situation in which BCRA reserves, this is of great importance”.

In the same reading, Menescaldi stated that “with a financial market that is on fire”. The remedies they are proposing are homeopathic and Those who have nothing to do with the disease should make strong announcements to end this crisis of confidence and another with political support”.

For Ruiz Palacios, “the measures are fairly modest, they don’t affect any central problem, and they don’t even come close to the fundamental change that the market is asking for, which is why the response of the financial dollar followed. ”

The expert stressed that the “problem is deeper” and highlighted that this is evident in the June fiscal deficit data released on Wednesday “which was quite bad” and that “trade with a negative balance for the first time since October 2020″. balance”. ,

,The market is entering a state of panic and these modest measures are less than turning the tide“He did justice.

For his part, the Economist Federico Glustein He recalled that “while he promoted the creation of accounts for tourists to contribute to MEPs, not a single one was opened, everything that required bureaucracy, the person entering the country did not use it, and That’s what that remedy shows.”

“Liquid reserves are zero, there are not enough dollars coming in from foreign trade, the trade balance is already in deficit. This measure today The fire has to be extinguished with a can of water.he questioned.

At the same time, Santiago Lopez AlfaroThe President of Patent Valores pointed out that “this is a measure that even can spoil the price of blue Because there was a great offer in that market because a lot of tourists go in informal dollars”.

in tune, Jorge VinasoPortfolio manager at Toronto Trust said that “this is a very limited move, I doubt it will be enough to quell expectations, but This could be a preliminary step towards wider and more formal disclosure.”,

Parallel Dollar: Will Growth Stop?

Anselmi argued that the measures taken “There’s No Chance They’ll Stop Anything” Because the government “does not understand that the dimension of the problem is of fiscal and monetary origin.”

“With measures on receptive tourist dollars, they are only going to intensify everything because they confirm that they have a completely wrong diagnosis of the issue,” he emphasized.

Javier CasabaliThe strategist at Adcap Grupo Financiero argued that “at a time when the market is asking the minister to clarify how it plans to reduce the deficit, a project universal basic salary who proposes to increase it, If the only way to finance it is to issue more, it’s only natural that the dollar rises.More and more pesos for less and less dollars”

López Alfaro commented that “They have to come up with a plan, a fiscal path and take more substantial measures so that the market calms down”,

Along the same lines, Repetto argued that “Terrorist measures should be accompanied by a lot of political support, President if he gives a press conference Albert Fernandez, Vice President Christina Fernandez and Minister of Economy, sylvina batakiso saying they are all Committed to meeting IMF deficit target And they’re going to do it by 2022 and 2023, no matter what, and show how they’re going to do it, the dollar will calm down.”

“But as long as they continue to issue and spend, the pressure will remain on the upside,” he speculated.

Albornoz agreed that “economic policy is passing through a deep crisis of credibility, It is necessary to over-react in monetary and fiscal matters To give a strong signal to the market that this very delicate situation is still likely to be reversed”.

financial Analyst, Christian Butler That “you don’t solve the run with this dollar measure for tourism” and in that scenario “it’s very difficult to know how far the dollar can go while the government continues without giving the right signals.”

,The only way to fix it is to dry the weight class.BCRA would have to go out and absorb the pesos in a stronger way than they did when they went out to buy bonds in pesos, so that they stop putting pressure on the exchange rate and for that they issued over $1 billion As in, until they do, it doesn’t calm down.”

Another broker recounted: “It’s a bullfight, it’s more reckless than ever to try to hit the ceiling, the transaction is being dollar to pesos, and nobody wants to sell dollars.” ”

What other solutions would be there?

In this area of ​​stockpiles and exchange rate tensions, the government is studying measures to try to expedite foreign exchange settlement to exporting grain companies in the coming weeks.

Due to exchange uncertainty, these sales have slowed, in a scenario in which soybean producers are even more conservative.

A negotiating channel was opened The idea is to send a window of time in which the soybean sellers make a financial profit.

The talks with the exporters are being done by the Minister of Agriculture, Julian Dominguez.

in the last hours Rumors spread that a differentiated rate change could be implemented for exporters,

Even then, official source The government assured thatIt’s a big crap about dollars for agriculture, There is nothing like it” and pointed out that “this is part of speculation aimed at forcing the exchange market by restricting the supply of foreign currency”.

“nor any measure is not assessed which is intended to improve such exchange for agriculture”.They said ..

Nation World News Desk
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