“The blue does not worry me, because in the medium term it is arbitrated in relation to the MEP and the CCL. In the short term, it is governed by the panic of retailers that validate any price, but what you have to look at are the financial dollars that mark the dollarizing impulse of the market.“said the economist Sergio Chouza about Friday’s prices where the parallels managed to loosen – albeit to a short extent – the tension. “They are panic prices, it is logical that at a certain point a certain hint of prudence arises and some agents begin to evaluate clearly there was an overreaction in this escalation”.
In the same line, expressed the financial analyst of Wise Capital Ignatius Morales In a recent report, “parallel dollars are closely related to the exchange rate between BCRA liabilities and reserves. Today the difference between it and the CCL is 22%, so according to this metric, in this level the parallels would start to be overvalued. Although it does not mean that they will not continue to rise“, he warned.
For Camilo Tiscornia, Director of C&T Economic Advisorsthe current moment is “of a lot of volatility, a lot of nervousness and as we are seeing the Central Bank (BCRA) does not have much firepower of reserves in which it could intervene. Also, due to the agreement with the IMF, it is not supposed to intervene with the CCL directly. That obviously limit“.
The impact of the new measures
This week, the body led by Miguel Pesce took two measures to try to stop the rise of the dollar. One, aimed at foreign tourists and the other, at companies.
In dialogue with this medium, Chouza considered that they are “isolated patches, not very effectiveIn this sense, the analyst assured that the decision that aims to facilitate the liquidation of foreign currency from foreign tourists “is the one that is going to give the least results.” He maintained that, according to his estimates, the flow of dollars from foreigners that is channeled in the informal market it is around US$3,000 million.”About that, how much will effectively go to the banking segment or exchange rates that adopt this modality, I think it will be marginal. It is a measure that is welcome that they do it, but it seems to me that it will have little success.
On Thursday, it was also reported that companies that access the official exchange rate will not be able to register a holding of more than US$100,000 in Cedears. This decision, according to Chouza, aims to “turn over part of the corporate savings of companies that today dollarize with these instruments to other types of assets that serve to finance the treasury or to save national currency. I think there will be some disarmament, not much, and it can serve, even for a minimal fee, as financing from the Treasury”.
Firepower
With increasing volatility, the tools at hand to stop the escalation are not many. This was confirmed by Camilo Tiscornia.“There are interest rates and trying to get tourists to sell to a market. Trying to get tourists to sell in a market, trying to force more dollars to be offered in the freer market, and there is also the limitation that companies buy CEDEARS that go for the CCL. They go for the regulatory side”.
“It would remain to raise interest rates as a way of trying to keep them in pesos. What happens is that at this moment that also generates uncertainty, because what has to be paid for the lelics also grows. The BCRA is very limited, the situation is complicated. There is a lot of speculation and a lot of fear. In this scenario, stronger decisions are neededTiscornia explained.
“Not having dollars to intervene, not being able to raise the interest rate much, a little more definition is needed. It is seen that the original problem is the fiscal deficit and the issuance of pesos. The excess of pesos is not being attacked, for it’s the focus is on what Batakis can do. If there are no credible ads out there it’s hard to control this,” she added.
what’s coming
Along the same lines as Tiscornia, the latest report from Ecolatina it also focuses on the short-term picture. “We are in the presence of a scenario of greater fiscal austerity going forward: without a relevant margin to finance itself with Temporary Advances (even failing to meet the goals with the IMF), the financial program will continue to rely heavily on debt auctions. For this reason, normalize As soon as possible, the financial front becomes even more important, and we will surely see increases in interest rates, which have been postponed”.
“Finally, even if the economic program is redirected (the BCRA accumulates reserves again and devaluation expectations are deactivated) the second semester will be of higher inflation, less activity and with more rigid fiscal limits than the first, indicating that the financial/political/social balance will continue to be unstable. With little time to make substantive corrections that yield positive results, but still plenty of time to contain costs, the current financial crisis is forcing the Government to stop prioritizing profit maximization to focus on cost minimization. And avoiding a devaluation of the official dollar will be at the top of the list of priorities in the coming days,” the report added.
Tiscornia, concluded with the end-of-month tender that will have the Ministry of Economy on edge. “The government has already achieved a lot in the previous tender, but it is not the best time to go out and get pesos. They are going to have to change things a bit because the result can be bad and that can fuel mistrust. We are going to continue in more volatile environments until the government makes clearer decisions.”