Minister Sergio Massa’s plan to allocate $1 billion buying back the debt and thus obtaining a lower country risk is not working for now. In the four business days since the announcement of the measure, a third of those funds have already been used to purchase dollar bonds and country risk remains at the same level that at the beginning of the plan.
This Monday, the foreign exchange market had almost no movement. The blue dollar, which started the round one peso down, eventually closed at its level $376, the same price as last Friday.
On the side of financial dollars, MEP remained at $352, while cash with liquidity, the way companies use to become dollarized, rose 0.6%, at $363. With this price, the CCL has set a new nominal record.
Therefore, even what for analysts was the real objective of the Massa plan is not achieved: to make the alternative dollars fall back to relieve the pressure on inflation.
With the government tourniquet applying to imports, in many sectors the dollar of reference for setting prices is no longer the wholesaler of $184.3but an intermediate point between this value and that of financial dollars.
To loosen the price of the MEP and collect with liquidity, both the Central Bank and other public bodies had intervened through the purchase of securities to thus artificially lower the price.
What was sought with the operation announced last week was whitewash this mechanism to make the market transparent and remove criticism from the Monetary Fund which does not endorse the use of reserves for this type of intervention.
So far, according to Adcap Financial Group calculations the Central Bank disbursed US$ 315 million in the purchase of bonds. Only in the Monday wheel would he have destined her 54 million dollars.
In this waya third of the 1,000 million dollars Massa was talking about has already been used up without satisfying either the declared objective or that deduced from the market. The situation is further complicated because after the complaints of the opposition first and then at the request of Massa himself, the National Securities Commission is investigating alleged irregular maneuvers with the securities.
Country risk, the JP Morgan indicator that measures the extra rate that Argentina would have to pay to get into debt closed at 1843 basis points, only 37 points below the level of a week ago.
The intention declared by the minister was that the decline in country risk was the key for Argentine companies to get financed again.
However, Consultatio reports that even with a 1,000-point drop in country risk, the cost of financing would be 14%, which would continue to be prohibitive for local businesses.
To the dollars that go to purchase bonds, we must add the reserves that the Central delivers to the market to satisfy demand. It sold $54 million this Monday and is already racking up $200 million in sales for the month.
In this context, the Centrale raised the rates for the buybacks of mutual funds. From Aurum Valores they state that this measure seeks “that funds download more pesos to the BCRA to make short-term rates more expensive and in this way discourage dollarization. The rate adjustment will affect the banks which will have to raise rates or refuse deposits”.
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Source: Clarin
