In the days leading up to August 2, when Sergio Massa took over as Economy Minister, the blue dollar had reached its peak of $338. In the last week of the year it went up to $356.
Therefore, between these points, blue was up 4.4%, less than what a fixed-term deposit makes in pesos in a month.
What is known as “interest rate speculation” (the switch to options in pesos while the dollar is assumed to be calm) has left an excellent result for those who, making a fixed expiry at 6.3% per month, have managed to beat the dollar in the latter part of the year.
But something has started to change in recent weeks: Mutual funds (FCIs), which are big market players, parted ways with $59 billion of inflation-linked bonds (CERs) in December, making it clear that your preferences are now other.
CER bonds (which give rise to the cost of living as income) won the investor election amid skyrocketing inflation that was unleashed by the resignation of Martín Guzmán from the Ministry of Economy in mid-year.
The inflation regime has gone from 3/4% monthly at the beginning of the year to 6/7% which now aims to drop just over 5% in December, but with Massa’s aim of “starting with 3” in April.
The change of focus of the mutual fund experts, who now bet on fixed-rate deposits or bonds, would respond to the fact that they believe Massa will achieve the target of reducing the primary fiscal deficit to 2.5% of GDP engaged with the IMF and that the Central Bank, as stated in one of its latest reports, will continue with its policy: “the positive real interest rates act by encouraging savings in pesos”.
This premise was fulfilled in the second half of 2022, but in a context that does not leave much room for celebration, helping to build a financial maze with an uncertain exit.
From the Central Bank, Miguel Pesce has acted on two fronts: on the one hand, he buys bonds to place a ceiling on market prices and, on the other, absorbs a large amount of pesos by placing Liquidity Letters (Leliq) and making bank transfers.
Banks, in turn, are faced with a difficult dilemma. The Central Bank withdraws the pesos received for time deposits from individuals and companies and mutual funds and sets the reference interest rate 75% for placements of up to $10 million by individuals.
A saver makes a fixed term for which he receives 75% of the annual rate, those pesos will buy Leliq for which the bank receives 75% and the Central Bank absorbs those pesos in an attempt to prevent them from even buying dollars or to lubricate the increase in the cost of living.
Those liabilities of the Central (Leliq, pass, etc.) already exceed the $10 billion and they are one of the permanent points of attention of those who believe that this “mountain of pesos” constitutes a debt that, sooner or later, will it will have to be reduced to make it viable.
Since the start of Alberto Fernández’s government, the Central Bank has insisted on the need to promote a capital market, but inflation and distrust and the loss of the reference value of the peso play a bad joke on it.
One of the proofs fueling the current risky financial maze is the inability of the Treasury to obtain financing in pesos by 2024. The financial “wall” implied by the presidential election in late 2023 has been solidifying for months.
But in the latest Treasury debt tender, the government got more funds than it needed hand in hand with public bodies and the strengthening of some sort of stocks for weights.
The financial system faces a sharp decline in the demand for private credit. Companies are reducing their demand for loans, partly because they raise pesos they don’t know what to do with and partly because rates of 100 or 130% would be priceless. Banks and customers agree on this.
Banks, with many pesos, are thus faced with the dilemma of lending the pesos to the Central Bank or the Treasury tying their active portfolios to the fate of the assets of a paperless state or having to refuse deposits from people and companies in order not to fill up with pesos for those who can’t find compensation.
The “weight trap” can advance and grow as long as the “dollar trap” remains in place. For now, with a strict administration of dollars at the official price to be able to import, the ship goes.
With the real exchange rate with a delay calculated at 25% the year leaves favorable results for term depositors.
Furthermore, as highlighted in a report by Dario Epstein-Research for Traders, it was a happy year in Argentina for energy stocks (dollar ups: Vista +167%; TGS +125%; YPF+ 119%; Central Puerto +80 %; Pampas +38%; Edenor +35%).
The high rates for pesos and the high price of energy globally have generated good returns for some savers and investors in the year of the inflationary stampede.
AQ
Source: Clarin
