Thursday, March 30, 2023

Following the announcements, implied future dollar rates fell by 15%.

Along these lines, Tomas Ruiz Palacios, fixed-income strategist at Consultio, stressed that contracts fell 3% or more since 2023, while 2022 contracts fell lower, but higher if compared to July 29, on Rofex. , even the smallest contracts are falling significantly. “For example, in December contracts, the dollar at the end of July was $195, and yesterday it was $184. Similarly, implied ones, which were between 100% and 120% at the time, are now between 87% and 100%. are in the middle”, he said.

For his part, Rofex stock operator Juan Ignacio Bob Lehmann opined that “the fall in implied rates across all tranches during yesterday’s session demonstrates confidence in Massa’s speech, and devaluation highlights a decline in expectations, as the future Dollar prices fell in the U.S. and BCRA’s sell position was reversed”. He continued: “They made it very clear that they will not devalue that rapidly, and from my point of view, I think they are going to avoid it as much as they can.”

Thus, August begins with a change in trend in the futures market, when the central bank had a strong short position during July, which is estimated to be worth over US$7.5 billion due to a large increase in demand for contracts. In this sense, after Massa was assumed to be in charge of the Treasury, the hopes of a thoughtful leap seemed to dissipate, at least temporarily. It so happens that, for analysts, the dynamics of the center’s reserves can turn the trend at any time.

“We see a decline induced by new economic leadership signals that there will be no devaluation in the A3500 exchange rate (the official one). Nevertheless, I think we may see volatility in the days ahead. BCRA continues to lose reserves and The amount accumulated for the intervention in the MULC yesterday fell to zero so far this year. The question is whether it will be able to reverse the trend and maintain the official exchange rate,” Reschini said.

Ruiz Palacios agreed: “Both the decline in Rofex and the linked dollar trading 1% below average, go hand in hand with the announced measures in which devaluation expectations were reduced. Stability should be evaluated, and whether Whether the special arrangements are considered effective or not, given the large loss of central bank reserves, which, if this continues, could reverse the trend”.

Nation World News Desk
Nation World News Desk
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