In the latter part of January, the Economy Ministry mandated the Central Bank to exit and buy back Argentine dollar-denominated debt, a measure that has been questioned by both the market and the opposition. of thes 1,000 million dollars that would have been allocated for this purpose, the plant spent 374 million dollars in January alone, according to municipal data. But the lack of net reserves is worrying and could hold back this move.
In the first three rounds this month, Central reportedly bought another $147 million. More than 90% of operations are focused on Global 2030 bond, the bond that investors use most to convert cash into cash. In this way, a total of 500 million dollars would have already been used.
With an eye on the foreign exchange market, the strategy paid off: Cash with settlement fell 1.2% in February and closed Friday at $362.95. At the same time, the MEP dollar is advancing just 0.7% this month and closed last week at $357.36.
But from the point of view of parity of securities, the reason given by Massa to justify this repurchase, doesn’t seem to affect: the GD30 closed lower on Friday than on January 18, when this plan was announced. In Delphos they warned that in this way the prices of the dollarized securities “are moving away from the highs observed on the day of the announcement, influenced by a negative trend in the rest of the emerging debt”
In the city they insist that the cost of this measure is high: the persistent decline in reserves and the warning from the IMF would force the economy to review these operations.
“The IMF has communicated that reserves continue to be scarce and has expressed a preference for having no risks in opposition to the measure adopted by Massa to buy back the dollar debt,” they said in the LCD advisory. “The government insists this does not alter net reserves, but rather gross reserves. However, both in gross and net reserves the country continues to be below a standard with which it can have normal development, i.e. without a restricted exchange”.
It is exactly the lack of dollars which may force the government to somehow halt the move it has engineered to prevent parallel dollars from skyrocketing.
Economist Fernando Marull said: “Agriculture will continue to liquidate low in February and the BCRA will continue to sell on the foreign exchange market. He knows he has only 5,700 million dollars and must arrive in April. Fortunately, it rained in January and put a stop to the deterioration of the crop. The harvest will be bad, but not very bad.”
It is assumed on the market that Sergio Massa will have to “pull a rabbit out of his hat” in the short term. TOthird edition of the “soy dollar” program. The famous “repo” that has been in the pipeline since Tigrense’s arrival at Economia is taken for granted, as is the creation of a loan guaranteed by international organizations.
This is a common transaction in the banking world, where investors buy securities for cash and reverse the transaction for a specific term and interest. This option was ruled out when Massa took office at the Palacio de Hacienda, due to the high financial cost which implied due to the low price that dollar bonds held. The debt instruments rally put it back on the table, although it would imply rates of around 30%.
Source: Clarin
