Although the blue dollar appears calm on the street, the financial dollars are showing increasing tension: last week, amid doubts over the exchange of debt for pesos and a greater drop in central bank reserves, both the dollar counted with the liquidation and the MEP is finished. The case closed at $393, up more than 6% for the week, and warm weeks are expected in the City.
Behind this progress there is not a single explanation, but a myriad of factors. On one side, a bad global climate affecting emerging economies. This can be seen from the price of dollar bonds, which left the end of the promising year behind very early and which, after closing in the red in February, rack up discounts of up to 12% this month.
The caution on the rate hike by the US Federal Reserve was joined by the appearance of a “black Swan”: the failure of Silicon Valley Bank, the second largest banking collapse in recent US history after the collapse of Lehman Brothers in 2008. Global markets were hit hard on Friday and Argentine assets were dragged down by this climate of uncertainty.
At the local level, the economic program does not seem to be taking hold. The Central Bank has already sold more than $1.4 billion of its reserves in the foreign exchange market so far this year, drought promises country’s dollar revenue in 2023 to drop by $20,000 million and the Monetary Fund continues to give its approval to make the objective of accumulation of reserves more flexible.
Negotiations with the body are essential: The country will have to pay $2.7 billion next week.
Added to this are the very bad inflation data that INDEC is due to publish this Tuesday for the month of February, in the midst of overheating prices in March. It is also the result of a debt conversion into pesos which, according to the consensus of the local market, it was “necessary” but its effects were “little”.
All this combo could cause the financial dollar, which has been practically stretched since mid-January due to more official interventions on this front since the beginning of the dollar debt buyback program, to continue its upward path.
“Our convertibility exchange rate indicator continues to demonstrate this the CCL has plenty of room to keep climbingDelphos analysts said, adding, “Despite recent gains, it is still below the ‘Qatar’ dollar ($415), a value that has acted as a ‘ceiling’ since early October.”
The financial dollar has lagged behind inflation. At the consulting firm Aurum Valores they estimated that, although the inflation accumulated between the end of 2020 and February 2023 reached 230%, all exchange rates have moved backwards. Over the same period, cash with liquidation and the equity dollar rose 170% and 164%, respectively; while blue is up just 124%.
In the Municipality they believe that, faced with this scenario, the fund will begin to recover ground. “Faced with tight foreign exchange supply due to the drought and the advance due to the previous two versions of the soybean dollar, the economy will likely face a new round of inventory tightening. Activity and the exchange rate gap would once again be the casualties“said Nery Persichini of GMA Capital.
“The heightened risk aversion globally affects Argentina, inhibiting the decline in country risk and indefinitely postponing any attempt to obtain financial dollars. In that sense, cash with liquid would have more reason to go up than down, as electoral trading in Argentina gains layers of uncertainty,” he added.
Country risk closed above 2,200 on Friday and dollar bonds dropped below $30. Also suffering are Argentine shares listed on Wall Street, which closed with reds exceeding 8%. Damage is expected to be measured in the US this week and this will put pressure on local assets.
“The fear of a possible contagion has generated a greater aversion to risk, and the markets have taken refuge in the safety of US Treasuries; so much so that the 10-year rate fell by more than 20 basis points in Friday’s session alone,” he said the economist Fernando Marull.
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Source: Clarin
