The strengthening of offer between the dollar and interest rates of fixed-term deposits for the capture of savings in the election years of this 2023 it starts early and has particular characteristics.
Traditionally, in odd years, the savings of companies and individuals seek cover in the face of uncertainty that lead to elections.
In this case, and on the basis of what is already traditional in Kirchner’s politics, the attempt to “align variables” (in the words of Vice President Cristina Kirchner) looking reject the dollar price in an effort to calm inflation and research that wages grow above devaluation the official exchange rate and the rising cost of living.
This year that tactic finds drawbacks be achieved, at least, by three fronts: the dollar, inflation and the interest rate of 75% per annum fixed-term, which serves as “money corset” to prevent excess pesos in the economy from going to the purchase of goods or dollars.
Since the beginning of the year, the level of the reference interest rate established by the Central Bank (75% per year) has been analysed. At first because it was thought it would comfortably outperform inflation and now because it may need a tweak quiet expectations on inflation that comes with as little as 5% a month.
The discussion on the monthly interest rate of 6.2% addresses another important aspect on which the head of the Central, Miguel Fishit has been on the alert since the days when Martín Guzmán headed the Ministry of Economy.
When the Central Bank raises the reference rate or that of the Leliq (liquidity letters which it deposits in banks to absorb funds at 75% per annum), the floor of the cost of financing his matethe Treasury, managed by the minister Sergio Massa.
And this is where the controversial issue of the maturity of the debt in pesos before the elections comes to light, on which Together for change he warned of a legacy for the next administration and the government has reacted by saying the opposition “wreaks havoc” to harm the chances of rolling over the debt for longer than August, when internal elections are held.
The issue of shortening public debt refinancing terms was long before any complaints from the opposition, but for the government, any argument is valid in an effort to shed the distrust that has been building throughout his administration.
With the data on maturities in hand, all that remains is to do the math. This month, the Treasury’s debt in pesos of 272,389 million dollars is due, reaching 709,730 million dollars in March.
From there the straight gets steeper and into April, May and June maturities are approximately $2 billion per month through July, when the cumulative rises to $3.3 trillion.
It won’t be easy for the government seduce the markets borrow pesos either with bonds linked to a fixed rate or with double bonds, which imply a hedge against higher inflation or a leap in the dollar.
With Kirchnerism from the hand of the vice president Cristina Kirchner and de la Cámpora, with the silent accompaniment of Sergio Massa who initiates it Political process of the Supreme Court of Justice for not wanting to comply with a sentence that returns the funds to the Municipality of Buenos Aires it is very difficult to think that the markets will feel bullish although, furthermore, the possibility of profits might make him forget that threat for a while.
But the winning climate of hope at the start of the year in financial matters seems to have entered the shadow zone.
On two occasions, the finance secretary, Eduardo Setti, teased during the week via Twitter that they would be out to buy back global dollar bonds in an attempt to drive them higher to lower the country risk rate and, presumably, to post AL30 and GD30 as collateral for a US$2,500 million repo loan international banks.
Both the AL30 bond (listed at $29.35) and the GD30 ($34.35) accumulate an 8% decline in the month. The possibility of recovering public credit is difficult for the government even though it allocates a part of the dollars, always scarce for the Central Bank, to the purchase of public bonds which in theory are still convenient, but are not attractive to demand.
Source: Clarin
