Friday, September 29, 2023

The dilemma between the dollar and the rate (fixed term) comes alive in the face of inflation data: does the Carry trade gain?

It is worth mentioning that the dollar bag remains below BLUE with a monthly return last month of 31.8%, over rate, but this month the yield is only 2.3%. at the moment. while cable increased no less than 40.6% in the eighth month of the year and In September there was a drop of almost 4%.

The same happens with Dollar blue, which is more unstable. In fact, in August, that market, driven by 22% devaluation who applied to BCRA at the official exchange rate, it increased by $185 (+33.6) and, in September, marked a sharp drop to $20 a week. This Tuesday, on the other hand, $5 pesos below the closing price of August, at $730.

Because of this, Buteler pointed out that “the production of instruments in the peso It’s tempting although there are products that adjust for inflation such as letters or bonds, which can be interesting for rate making but others dollar They were calm this time, not knowing how long. ” The key, according to his vision, is: yes parallel dollar bet or not and although.

BCRA’s strategy: calm exchange, interesting rate

And, in this scenario, the economist Fabio Rodríguez director of MyR Consultores, understood that “the Ministry of Economy and the BCRA they need to make sure of it mini exchange calm”, with an official of $350 and financiers around $700, with gap Don’t jump on it until, at least, the general election.

Rodríguez explains that this motivation, in turn, “requires a clearer and more sustainable real rate policy“. In his opinion, this is a direction that is “not very clear and he believes that it will be seen if the Government is convinced to continue deepening this road starting from Wednesday, when the inflation data.

But he warned that the BCRA they don’t have all the degrees of freedom to follow raising rates because it is limited to quasi-fiscal deficit dynamics. “So, I think they welcome a little summer together dollars stay and bring something that will also help the soybean dollar 4, considering the free availability of 25% of what is settled, which increases the supply of CCL,” Rodríguez described.

The BCRA is waiting for the results of inflation to determine what to do with the rates.

Therefore, as expected scope a few days ago, the economist Federico Glustein believes that “the market does not see an increase in interest rates, at least for now, because that means an increase in monetary issuance through BCRA liabilities, which already represent approximately 11% of GDP .”

Let’s remember that, today, the Traditional fixed term yields 9.7% per month, 118% nominal rate and annual effective interest (TEA) pays 209%, which Glustein estimates is “an interesting value when we consider other alternatives.” For this reason, and thought that the higher emissions of money is to pay taxes Liquidity Bills (LELIQs) it is not good to think of a rate increase this time, more than the fact that Private forecasts expect an inflation level of around 12%.

Cross carry between dollars and rates

Therefore, for Glustein, “now, the market is in a brings trade towards MEP and blue dollars, added to Cedears operations and ON dollars to cover itself, but it also works crossed with the rate and Leliq, which now pays positively. And the tendency to dollarize portfolios in this country cannot be denied. election context of uncertainty. However, investors and savers are bridging the gap quotes in different dollars and they never stopped taking advantage of rates which is very easy now.

And, on the one hand, the the gaps in dollar quotations drive, in part, the demand for foreign currency and, on the other hand, the incidence of The MEP intervened calm the expectations of a Carry-on maintained over time. However, Ferrari pointed out that another interesting possibility now is “make the transition to pesos through the traditional fixed term and then go to the dollar”, but warns that, if this option is selected, the inflation expected.

Nor does it reject the idea of enjoy the performance of the peso and then the dollar but warns that this decision depends on the benchmark or the objectives set and the time in which the entire operation will be implemented.

The big underlying issue is, without a doubt, this time, the focus Martin Kalos director of Epyca Consultores, when he assured that “the problem now is that the DOLLARS not sure because it is the big change variable between different election proposals“.

“Therefore, the expectation that each one investors about what will happen to him official exchange rate In charge is the decision when to do bring a trade or not. The evaluation if the devaluation risk higher or lower. Based on that, everyone will make their decisions,” Kalos detailed.

Therefore, he pointed out that, ahead of bowls in other words, whether or not the inflation at the current level and whether to raise it or not, the big question is How much does each believe the dollar will depreciate in the future?. “In that context, there are many options, but the main point is that you only bet on performance carry trade anyone who considers nothing to be a decrease in value in a very short term,” he sums up.

Nation World News Desk
Nation World News Desk
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