Argentine assets will move this week compass of the news emerging on the political front after the Chamber of Deputies gave a half sanction to the Basi Law project on Friday, also with some points that will be discussed again in the next few days.
The market is closely following the parliamentary negotiation while I analyze the fine print of the last one staff report of the Monetary Fund looking for clues on Javier Milei’s next steps, especially on the exchange rate front.
For Pablo Repetto, of Aurum Valores, An immediate reaction in asset prices is not expected Argentinians at the news of the half-sanction of the Omnibus law.
“There could be some effect, although it should be relative, given that the result of the vote in general had to be positive. We will have to see if the voting in particular brings with it some surprises which can have a more significant impact. Or negotiations on tax issues,” he said and added: “We must also consider that the Senate lacks the same process and, depending on the changes that could occur there, another vote in the deputies. So if there were any repercussions, there should be relative”.
What may act as a driver for the market this week are the fine print of the latest IMF staff report, especially after the fiscal chapter of the Foundations Law was excluded from the finally approved draft.
“During the week, tax changes were combined in the “Omnibus” law, which left a fiscal gap close to 1% of GDP, along with new discussions on the PAIS tax, which increases its participation in the collection. The IMF in “information report” continues to underline the importance of the fiscal anchor recover access to markets towards the end of 2025″, they indicated in the consultancy firm Delphos.
Investors are carefully analyzing how the government will achieve its zero deficit target. “The market works with Attention until this front is clarified a little more,” said Martín Polo, of Cohen. “Since last Tuesday, the headlines have been flat and the gap has increased: there is a certain interpretation of the fiscal outlook much more complex than what the government wants or communicates.
The Fund’s report describes steps towards exchange rate unification, which is only just beginning. be ordered mid-year. The Central Bank has not yet given any signs of an increase in the daily devaluation rate and in the City they warn that, given skyrocketing prices, the exchange rate of 830 dollars is starting to lose competitiveness.
“The amount of pesos in the economy measured in terms of GDP has decreased dramatically, but if they continue to be exposed to these levels of rates (devaluation and interest), there are risks of growing instability,” warned Repetto, who added: ” The information report also underlines the need for a more restrictive monetary policy and a competitive exchange ratesomething that will quickly be lost if they continue like this to crawl”
After the placement of the first series of Bopreal, the bond with which the Government seeks to pay off the debt accumulated with the importing sector, this week the Central Bank will begin bidding for the second series of this instrument. “Here we have to take into account that in the last tender the Central left out a part of the bond demand, which could have influenced the cash price with liquidity,” Repetto noted.
On Friday, the CCL closed at $1,288 and the MEP closed up 5% on a weekly basis. The gap with the official dollar it’s back to 55%. For Santiago Lopez Alfaro, of Patente Valores, this movement was predictable: “Liquidity has had a strong increase during the year, but for me this also has to do with the strong decline it had in December: reaching a gap of Nobody expected less than 10%,” he said and added: “it seemed to us that a normal gap in this program should be around 40% or 30-40%, now it’s a little above that level.”
Source: Clarin
