The market is impatient for the lack of dollars and definitions

At the weekend, alternative dollars rallied. Cash with liqui, the dollar used by companies, has passed the $ 300 mark and altered the pax exchange that the market had offered after Sergio Massa’s arrival at the Ministry of Economy.

In the first weeks of the new administration, the announcements of rate hikes and the cut in tariff subsidies generated positive sentiment. But in the absence of definitions e persistent difficulties in increasing reserves of the Central Bank, market impatience sprouted, resulting in a new decline in bonds and greater pressure on foreign exchange.

“The drop in dollars that has occurred since Massa’s arrival at the ministry has been a mixed effect between a better international scenario for the benefit of the entire region and an effect of expectations in the face of the change of direction of the economy “, analyzed Matías Surt, of the consulting firm Invecq.

For analysts, so far the only relevant measure of economic behavior was the increase in the market benchmark rate, which went from 60 to 69.5%in an attempt by the Central Bank to stop the transfer of investors from pesos to dollars.

Surt stressed that the rate hike “may force a certain demand for pesos for a while, but if there are no changes in tax and exchange issues, at some point it will stop working.”

Surt noted that “if the initial effect is not accompanied by a significant change in the conduct of economic policy, then that effect will eventually be diluted and we will review the instability we saw a month ago“.

As for the rate hike, “the details were known this week and we see it the savings on benefits will not even be enough to offset the payment of the bonus to retirees. In other words, there is no deficit adjustment on that side, ”Surt said.

For economist Gabriel Caamaño, of the consulting firm Ledesma, “Massa showed his intention to adapt a little more in the fiscal field, but this had a limit. subsidies, the market confirmed something I already knew“.

“Without a clear plan, to further decompress what you need is to get new funds to put reserves in the Central Bank. To decompress it is necessary to obtain financing in hard currency which does not yet exist “Caamaño summed up.

Roberto Drimer, partner of VatNet, stressed that “the drying up of the Central Bank’s reserves remains to be resolved, which would require in-depth measures”. Among these measures there would be “apply a larger devaluation and / or a split in the foreign exchange marketor for the uncontrollable, such as tourism, credit cards and services in general … provided that a political conflict does not break out in the meantime “.

“The pace of progress and the statements of the political leadership do not expose adequate concern for the current dire situation,” concluded Drimer.

“Although the devaluation scenario appears to be a possible alternative, very precarious initial conditions could cause a decent jump in the dollar to inject anabolics into inflation and the gap. A split, on the other hand, would be the most painless interim solution, despite the limitations that this type of regime presents in the long term. Meanwhile, the ‘Hold Plan’ continues its course“, collected by GMA Capital.

AQ