Michael Hasenstab, manager of the Templeton Fund
The rebound of the dollar relied on liquidation – market reference to test the mood of the markets – which again exceeded $ 300 per unitcaused some concern in the economic team.
Let’s remember: with the news that Serge Massa he would take charge of the economic portfolio, the foreign exchange market had calmed down for the waiting for the arrival of the former head of the Chamber it would put an end to the ferocious interior in the dome of the Front of All and direct economic management.
Calm seemed to crack in the last wheels. The CCL dollar, which had hit $ 340 at the end of July, fell back to $ 278 on Monday, but closed again above $ 300 on Friday.
Beyond the doubts generated by the sea of uncertainties In economic and financial terms, the version that has gained strength on the market is that a foreign fund decided to sell part of its holdings in bonds in pesos, in particular Treasury bonds in pesos maturing October 17, 2026, issued in October 2016. The amount of the issue was 60,191 million pesos, equivalent at that time to 3,970 million dollars.. They pay a fixed annual rate of 15.5% in pesos. Today, hyper amortized, yield of about 93% per year.
The big buyers of these papers were the funds PIMCO, Black Rock and Templeton. The latter is the one who allegedly sold the papers this week. It was said that for 2,500 million pesos which were then converted into dollars (only $ 8.3 million) through the spot market with settlement.
The operation is a pure loss. As stated, these funds bought bonds in pesos when the dollar was worth 15 pesos. And they sell them when the dollar is worth 300 pesos. An important break where you look at it. The risks of the carry trade.
If this operation were confirmed, it would endorse the fear that the Government and the Central Bank have for the movements of foreign funds which are still positioned in pesos today. Any move they make shakes the alternative dollar market.
former minister Martin Guzman He has referred to this topic on several occasions. And in fact he offered them a way out at that moment. He managed to get Congress to pass an exchange whereby the government issued a dollar bond that could be purchased with pesos bonds held by foreign funds. In June and December 2020 he exchanged for the equivalent of 1.5 billion dollars. The funds delivered their pesos bonds and kept the dollar bonds.
The problem with getting rid of large portions of these bonds is the Argentine capital market it lacks depththat is, of sufficient liquidity to absorb a sales order of this size without major problems.
The same thing happens in good times, when a fund brings in money from abroad to position itself in Argentine assets that are not listed abroad. Prices move very easily, both up and down. In this case, what went up was the price of the Cash with Settlement dollar, which is used by those who are in pesos and try to exchange them for dollars but in an account opened in a foreign bank.
It should be remembered that both the CCL dollar and the MEP do not have a direct impact on the Central Bank’s reserves. In these operations, the dollars that are in the hands of private investors change hands.
The Templeton version of the agreement was not signed by the entire market. There are those who are convinced that these international funds they have already completely canceled their investment in Argentine pesos and they are simply waiting for time to pass until the bonds mature, in this case in October 2026.