With an eye on Congress and the tense negotiations Javier Milei is carrying out with governors to get the Omnibus Law approved, the market will return to action this Monday. In the City they wait for negative initial reactioneven if it could moderate for some positive signs on the foreign exchange front and whether the president will finally be able to push the bill forward this week.
After the Minister of Economy, Luis Caputo, announced the removed from the fiscal package from parliamentary discussion, The market will operate with extreme caution. The economists consulted by Clarín agree that it is a “bad sign” in the short term, which can impact the price of stocks and bonds, although it may not have a direct impact on the exchange rate gap.
Wait and see (wait and see) That’s what investors believe they’re doing this week as the political fight takes center stage and resolutions await. Although Milei “lost” by having to manage the fiscal package to deal with the Foundations Act, Caputo assured Friday that the zero deficit goal remains intact. And this is good news for the market.
Fernando Marengo, chief economist at Black Toro, said: “It is clear that what happened on Friday is not good news, however, since November 20, Javier Milei has been elected president Its legislative weakness has always been known. Now that, despite the reduction of the fiscal chapter, the commitment to eliminate the financial sector is confirmed, it is excellent news, the market will certainly want to see the new measures to achieve it”.
“Unlike other adjustment programs where the Minister of Economy had to convince the President of the need to do things, and when it was abandoned due to political “necessity”, what caused good plans like Austral to fail, this time The President was convinced of the need for the program, something unprecedented in the history of the country“added Marengo.
For his part, Claudio Caprarulo, of Analytica, said: “The key lies in the signs that the government must quickly show how its fiscal target is supported after this setback. From Analytica We do not expect a strong reaction in the short term“For example, the likelihood of the entire fiscal package passing was low since its inception and this was incorporated into many positions.”
In this sense, Martín Polo, from Cohen, underlined: “The market could correct itself while it waits. The fact that the tax chapter remains outside the law, obviously puts him in a challenge to the government to achieve the goal of a zero fiscal deficit. Now we have to see what games they will fix or think they will fix and with what they think they will get. So, in principle, I think the market will be waiting and seeing the reaction or with some probability of adjustment.”
The impact could be felt in dollar bond valuations, which ended the week with mixed results, and in Argentine stock prices. Despite last week’s correction, most companies listed on Wall Street have recorded a positive rally this month, which could be influenced by political news.
The reaction on the currency front could be muted by two good news: the Central Bank continue with the purchase of dollars on the foreign exchange market and reserves exceeded $25 billion on Friday, a ceiling that had not been exceeded since before the October elections.
Furthermore, last Thursday the organization announced the success of the tender for Bopreal, the bond with which it intends to settle the debt with importers, and announced that starting next month it will give small and medium-sized importing companies the access to the official dollar to pay the debt incurred with its suppliers. On Fridaysthe combination of these factors meant that the exchange rate gap, which had reached 60%, fell to 49%.
Santiago Lopez Alfaro, of Patente Valores, said: “Bopreal’s latest races are going well. Central said that the importers’ debt was not as high as they thought. So it seems to me that for me there won’t be many negative reactions. It happens that liquidity with liquidity increased greatly in the first days of the year. So there’s not even much to go higher. The 50% gap seems reasonable.”
Source: Clarin
