2023-08-03 21:41:00
Investors and economists in Argentina are beginning to set a more precise time frame for the devaluation of the peso. Both in the movements of the futures contracts of the local currency this week, as well as in the public statements of some analysts, the bet that the central bank would be forced to depreciate abruptly is beginning to be more perceived the local currency immediately after the primary election.
The forecast focuses on that bounded period because it coincides with two events: the elections on August 13, which will be a litmus test for the Minister of Economy, Sergio Massaand the meeting of the IMF board, between August 17 and 21, which must decide the agreement with the country and the disbursements of money.
“The market takes note of the relevance of the date of the upcoming elections and decides to be covered against possible exchange rate jumps, hand in hand with statements from economists, the IMF statement and rumors in the media”, says Mateo Reschinisenior research analyst at Inviú.
Record dollar: the blue exceeded 570 pesos accompanied by the financiers
Where this bet was most perceived was in the futures market. The central bank must have reacted on Tuesday with strong sales of peso contracts, according to two people with direct knowledge. The Argentine peso by the end of August had reached a price of 329 units per dollar on Mondaywhich meant a direct devaluation of 19.5% in the month, and an implicit effective rate of 716% per year, from 386% on Friday.
“The market began to speculate that the prior action Argentina has pending between now and the IMF board meets is a discrete jump in the exchange rate more forceful than the ‘fiscal devaluation’ carried out last week,” the economists wrote at Personal Portfolio in his last report to clients. “The presumption is that the ruling party, for obvious political reasons, could adjust the official dollar after the primary elections”they said. The peso futures contract settled again this Wednesday at 317 units per dollar after official intervention.
The greater demand for currency hedging is also strongly noticeable in dollar linked bonds, where there are no official interventions. The rate of the title that expires in April 2024 fell this Wednesday to -8.4%, from -6.7% on Friday; and that of the one that expires in September 2024 at -10%, from -6.8% on Friday.
Massa dollar: how much did the blue and the financiers increase in a year of management
Spokesmen for the Ministry of the Economy and the central bank declined to comment when asked by Bloomberg News.
The club of devaluators is enlarged
It’s not just the traders. High-profile economists are beginning to dare to publicly forecast an adjustment in the exchange rate from mid-August.
Marcos Buscaglia, a partner at Alberdi Partners, sees “with a relatively high probability” that the week of August 14 will be “busy”, according to what he said by text message. “It is still probable that we will vote on August 13 and that we will devalue in the week of the 14th,” Buscaglia wrote this Sunday in the newspaper La Nación.
Your colleague Carlos Melconianadviser to the opposition party Juntos por el Cambio, predicted this Monday in a radio interview that “A devaluation after the primaries is highly likely.”
The CEO of the global grains trader Bunge, Greg Heckman, said on Wednesday in a call with clients that in Argentina “the elections are approaching and a devaluation is possible.”
Sergio Massa explained the causes of the record rise of the blue dollar
Opposition to the table
for the economist Emmanuel Alvarez Agisdirector of the consultancy PxQ, the fate of the Argentine peso will depend in the very short term on the electoral result of the current Minister of Economy. “If Massa obtains less than 30% of the votes, the IMF will force him to negotiate at a table where the opposition will also sit. And there will already be two who will want to devalue, and only one who will not, ”she said in a telephone interview.
The figure that speaks: US $ 24,000 million
It is the current stock of gross central bank reserves, the lowest level since 2006, according to official figures.
–With the collaboration of Jonathan Gilbert.
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