Difficult test for Guzmán with the country risk at 2,400 points

The market will be operational again this Monday at awaits key definitions that clarify doubts about the government’s economic program. After the debt swap last week, the real test for Martín Guzmán will be this Tuesday, when will go looking for $ 243,000 million to roll over bonds maturing at the end of the month, in a context of persistent investment uncertainty.

The effects of the local financial crisis have intensified in recent days. Even as the financial dollars fell from their highsthe blue exchange rate rose to a new high and closed at $ 226 on Friday. At the same time, the Central Bank had to shell out US $ 244 million of its reserves in just four shifts to meet import demand.

The body also chaired by Miguel Pesce it maintained its intervention in the pesos bond market, although the pesos continued to decline. According to market calculations, the agency already issued $ 440,000 million go out and buy inflation-linked stocks and calm expectations. Economists warn that this strategy will increase inflation and pressure on exchange rates in the short term.

The uncertainty was also reflected in the dollarized debt market, which continues to operate at new lows, and in the country risk rose to a new Guzmán-era high, closing on Friday at 2,400 points.

“The stress on the pesos and dollar markets is very significant. Dollar bond parities are at very aggressive default levels with country risk at new highs after default. Not even the news of the approval that the IMF has given to disburse the funds for this revision helps to moderate the flight of investors from internal risk, “warned Pablo Repetto, of Aurum Valores.

For City analysts, although Central Bank intervention may serve to mitigate the instability of the pesos debt in the short term, sorting out the rest of the financial variables will require that the Government shows and executes a fiscal consolidation plan.

“The debt in pesos continues without finding any signs of stabilization, with the flows of the FCIs that again this week recorded net bailouts and the BCRA playing a leading role as a provider of liquidity to support the functioning of the market,” said José Echagüe, of Consultatio, who warns that the correction of this market cannot yet be considered complete.

“Last week’s BCRA rate hike could be a starting point for a stabilization plan, but you can’t ask for more from that side. If it is not complemented by a strong signal of short-term fiscal consolidation, it risks ending up exacerbating the original problem.Echague said.

However, specialists do not believe that the economic team will show a comprehensive plan that will reverse expectations in the coming days.

“The fiscal and financial dynamics continue to be complicated for the government due to the great difficulty in achieving the objectives with the IMF, the frequent interventions on the bond market and the large liquidity that the Central Bank must sterilize, which is combined with a loss of reserves they accelerated in June “, underline analysts from the consulting firm Delphos.

“Faced with this scenario, the government seems to be aiming to tighten import controls without making announcements and try to renew deadlines in the best possible way“they added in Delphos.

FMyA’s Fernando Marull agrees with the look: “The pesos debt and reserve crisis deserves some reaction from the business team. At FMyA, we continue to wait for more regulation for pesos debt and more stocks,” to stop the bleeding of reserves, “he said.