President Javier Milei’s speech at the opening of the ordinary sessions of the National Congress last Friday captured the attention of investors with several definitions of key issues: he raised the question continuity of the adjustment and economic measures adopted after 11 December, but with the aim of building greater governability and building bridges with governors through the “May Pact”.
The Municipality’s expectation is that the market will provide support this initiativewhich had already been supported by various economic sectors of the country over the last weekend, with increases in bonds and shares but also with greater continuity of the “summer” on the currency front.
Argentine debt securities had already started the month on the right foot and closed on Friday with increases of more than 3%. Country Risk, the indicator that measures the JP Morgan bank and which reflects the extra cost that Argentina would have to pay to get into foreign debt again, it had fallen to 1,635 pointsthe lowest value since October 2021, ahead of the mid-term elections of Alberto Fernández’s government.
The shares, for their part, were also awaiting the speech of the president Javier Milei, in what would have been the first presentation of the year on the national network, and on Friday they moved with increases, accompanied by a better general mood. The expectation now is that, starting Monday, the “optimistic” trend will deepen.
Fernando Marengo, chief economist at Black Toro, said: “The market responded intuitive way for ads What the Government is doing. Clearly, the answer is that asset prices were very low for Argentina’s history, even compared to countries in the region.”
“The announcements that the government has made, essentially regarding fiscal adjustment, deficit reduction and the various measures it is adopting in this sense, while it is drying up the peso market, are having a good response from the market. Obviously we go also at the pace of politics, but from this point of view the opening of the sessions must be taken as a good signal from the market.”
Martín Polo, from Cohen, agreed that the market will give its support to the measures communicated by the president. For Polo, Milei’s speech dispels doubts about his vocation to negotiate with the opposition to obtain approval of the package of laws included in the Omnibus Law. “The market was already showing a propensity for optimism and this new opportunity will encourage it even more. Then we will have to see the The government’s ability to carry out reforms. But I think the market will be running on a slightly clearer signal this Monday,” he said.
Before Milei’s presentation there were some signs of nervousness on the foreign exchange market, driven by several rumors about changes in the monetary system and even about a new decent jump in the exchange rate. This resulted in a rebound in the financial dollar, which had closed February with a decline of almost 14%, and a jump of up to 5% in dollar futures contracts.
Santiago Lopez Alfaro, of Patente Valores, explained: “I think on Friday there were people who he covered himself from the rumors that they had. However, I think we will see the foreign exchange market continue on the same path we saw in February. The government is fixing the books, having a fiscal surplus, as the books say. In this sense the market will continue to react well.”
Analysts’ expectation is that the exchange rate gap will remain relatively stable and that the appreciation of the peso that has occurred in the last two months will continue.
“Now the phase of further liquidation of agriculture which, although weak, should begin to recover more and this will bring more supply to the market, in a context in which importers are somewhat lacking”, said Martín Polo and added: “The expectation is generated by the good financial climate of Argentina gives greater consistency to the summer: if bonds improve, the gap will also remain stable.
Source: Clarin
