Tuesday, December 06, 2022

Exclusive: Government will offer to exchange loans in pesos

The government seeks to reduce exchange tensions created by loan renewals in pesos through voluntary exchange for long-term public securities. In recent months, the renewal of short-term debt in pesos has been causing serious headaches for the government, because of its very close maturity structure, which puts pressure on each “roll over“Exchange rates and, therefore, domestic prices.

in an anti-inflationary triad in which appointed ministers of the economy work serge massa it involves increasing store for reservation Lower the cost of imports, reduce losses and reduce stress Which renews bills in pesos every month.

Treasury Bills Stock Recorded So far, successful renewals, although without causing continued pressure on the exchange rate.

this is because A good portion of these letters are in the hands of banks and investment funds. That, if they do not accept its renewal, they turn to the dollar as a refuge and put pressure on the exchange rate. This situation makes it necessary to offer increasingly higher interest rates, which further increases the amount of bills.

The situation became more complicated when the opposition said the country was unable to renew these maturities in the short term and began a run lasting about five weeks. To avoid new runs, Massa will propose the possibility of those bills of exchange for public securities maturing in 2026. The date is not random.

On the contrary, it seeks to give an indication that future administrations will not fail to comply with those commitments, As did former economy minister Hernani lacunza By essentially “reprofiling” the maturity of central bank bills, something never seen before in Argentina’s history, Default loan in your currency.

Deadline for this month 500,000 million pesos And in September it will be necessary to renew one billion pesos. So far, renovations have allowed for additional financing, but the operation is becoming more expensive.

According to economy data, a total of 1.04 trillion pesos were accumulated in the first seven months, with placements for a total of 4.52 trillion and maturities for 3.48 trillion. The refinance percentage so far in 2022 is 130 per cent; That is, 30 percent additional funding was received.

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