Sergio Massa’s truce with the financial market seems to have come to an end. The persistent outflow of reserves, which led the Central Bank to sell nearly $950 million on the foreign exchange market, came on top of a new Treasury auction that left “little taste”lead City analysts to predict that currency tension will increase in the coming days.
After being “frozen” for the past two months, contrary to the rest of the economy prices which have moved up by between 6% and 7% per month, financial dollars woke up last week. Now, both the MEP and cash with liquidation, the way companies use to be dollarized, are up 6.7% and 8.1%, respectively, so far in November, well above the accumulated inflation for month.
This is the expectation of analysts cash with liquidthe price that usually serves as a reference to the market is accommodated these days above the value of the “Qatar dollar”, Friday’s one closed at $338, and that served as a floor for the rest of the alternative dollars in a market where the commitment to investing in pesos seems to have gone out of fashion.
However, the strong tension in the peso debt market, where the Central Bank has once again intervened by purchasing bonds to support the price level, makes both investors and the government nervous. “The frequent interventions by the Central Bank in the peso debt market to counterbalance the growing uncertainty about the roll-over, they increase market liquidity and put pressure on the MEP/CCL,” Delphos analysts explain.
In the consultancy they estimate that so far this month the central It has already issued more than $250,000 million in the past month to support the curve in pesos, a figure that seems much lower than the 1,100 trillion dollars that the agency issued between June and July last, in the prelude to the last exchange race that ended with Massa’s arrival at the Palacio de Hacienda, but which shines a yellow light on the future of the markets.
Furthermore, the market warns that it is more difficult for the Central to renew its debt securities. In the latest regulation, Leliq managed to renew just under 80% of the total maturities.
“The situation of the debt market in pesos must be observed with particular attention. Although it depends not only on what the Government can do, but also on signs that the opposition can maintain some order until the end of the mandate is a necessary condition,” said Nery Persichini, of GMA Capital, who warned that in otherwise, a higher emission by the Power Plant, “it would put pressure on the exchange rate and add fuel to the inflationary fire”.
The economist calculated that, adjusted for inflation, the latest nominal high in cash with settlement would represent about $396 today. Meanwhile, Fernando Marull, of FMy Asociados, warned: “If peso debt is controlled, it seems logical that the CCL will reach levels of $360, as the convertible dollar suggests”.
On the other hand, in a scenario of renewed stress in the peso debt market and further decline in reserves, “it seems logical that the dollar would reach levels of 430 dollars during Guzmán’s departure,” he warned.