The bad news came from abroad and changed the euphoria for pessimism. Negotiations for the swap with China are not progressing as expected. The conversations are stuck. They want to renew USD 5,000 million, but if the proposal does not prosper, they will have to be paid in two tranches in June and July, which would be a blow to the net reserves and to the objective agreed with the IMF of accumulating them.
Of course, the dollar, sovereign bonds, stocks and Bopreal were affected and had significant drops in their prices, in addition to altering the mood of investors who began to change their portfolios.
Dollar buyers were eager. They were waiting for the market to open to get foreign currency. At midday there was calm, which was short-lived because the buying fever quickly returned, taking them to the top of the wheel. The MEP dollar ended with an increase of $52.09 (+4.4%) to $1,269.91, while the cash with settlement (CCL) advanced $51.44 (+4%) to $1,297.47. In one day they wiped out the profits of a multitude of carry trade. Precisely, those who had abandoned the dollar to switch to pesos and earn from the rate were the biggest demanders of foreign currency yesterday. The exchange, the difference between the MEP and the CCL, rose to 3%.
The “blue” increased by $10 to $1,235 because it closes two hours before the financiers who, after the increase, surpassed the prices of the free currency.
“The lowering of rates seems to me to have been a violent and somewhat hasty measure because it leaves the rate in pesos very close to the devaluation rate. A paid rate is 2.5% versus 2% for crawling” (Salvador Vitelli)
For analyst Salvador Vitelli, an expert in agribusiness, “it was a difficult day for the dollar, the stock market, sovereign debt and Bopreal, which, despite being conservative and less volatile than sovereigns, succumbed. This occurred in a difficult context that came from outside to which we added our own volatility. The low volume of exporter liquidations in the CCL took away supply from the market. At the same time, the gap between rates in pesos and dollars begins to adjust and positioning in dollars begins to be attractive and, logically, this tends to depreciate the currency and make dollarized instruments attractive.”
But it is not the only advantage that exporters saw. Did anyone imagine being able to finance themselves in dollars with negative rates, that is, returning fewer dollars than requested? Vitelli explains it. “In the agricultural world it is beginning to be seen that with dollar futures and these implicit rates and an extra combination of financing in pesos, They can be financed in dollars at a negative rate of -7 and -8% in a synthetic operation that allows you to pay fewer dollars than you borrowed. With the drop in interest rates, the exchange rate issue begins to become glassy and a little more fragile on a path where the Government wants to accelerate, but at the same time be cautious regarding the migration of pesos consequently with the exit of the stocks. In case they could get out with the help of extra financing, there are different variables converging against this management as a result of the measures that have been taken. By case, The lowering of rates seems to me to have been a violent and somewhat hasty measure. because it leaves the rate in pesos very close to the devaluation rate. A paid rate is 2.5% versus 2% of the crawling. That is why the incentive for agriculture was greater when the rate was 8% and crawling was 2% monthly.”
Meanwhile, in the Free Exchange Market (MLC), only USD 230 million of which the Central Bank bought USD 52 million.
Andrés Reschini’s F2 report points out that “the commodities agricultural do not bring good news at the beginning of June. The only one that remains with gains so far this year is wheat, while the good conditions of corn in the United States and low export data maintain downward pressure for soybeans (-6%) and for corn (-9 %) so far this year. “Five consecutive declines were responsible for eroding 5% of the value that soybeans had managed to increase in Chicago.”
Regarding business in the MLC, he indicates that “the volume of liquidations remains in focus while the market does the numbers for agriculture, which continues to receive blows from the external front with the drop in prices and on the internal front with the exchange rate appreciation. and tax pressure. As if that were not enough, the forecasts do not accompany it either.”
Sovereign bonds had a bad run where the most representative ones, the AL30D and the GD30D, lost up to more than 3%. The country risk flew. It rose 102 units (+7.7%) to 1,414 basis points.
Bonds in pesos had a better run. Those that index by CER had slight increases of 0.17% for those selling this year and 0.83% for those in 2025.
To cover themselves, dual bonds were sought. These titles that adjust for devaluation or inflation had increases of up to 2.12% as was the case in January 2025 and 0.83% for August.
For trader Nicolás Cappella from Investing in the Stock Market, “we see that more and more Funds are beginning to launch pure LECAP FCIs with immediate liquidity, which also causes more demands for short LECAPs. In this way, the LECAP curve was steep in the short section. However, we are beginning to see a limit to the rise of the short tranche, since, at these effective monthly rates, the short tranche begins to equal the surety rate which, ultimately, puts a floor on it.” The stock market had a negative turn with regular business. The Merval of the leading stocks rose 0.3% in pesos, but collapsed 3.4% in dollars. The best went to Mirgor (+4.77%) and Transener (+3.06%).
The ADRs – certificates of stock holdings listed on the New York Stock Exchange – had a full round of reds. The biggest falls were in energy companies. Central Puerto lost 5.6%; Edenor, 3% and Telecom, 5%.
The good news was that the data of the passes that were reduced by $4.7 billion were known, although today they may increase, but they will remain at values that have not been seen since May 2005. This was a Government strategy to migrate the pesos of the short-term liabilities of the BCRA towards the Treasury.
Another important fact was highlighted by FyMA, Fernando Marull’s consulting firm. “The Treasury repurchased all the AL29 bonds that the Central Bank (BCRA) had in its portfolio; He buys them with the pesos he has left over from the biweekly Tenders. Today the BCRA has only USD 1.7 billion left, a little from AL30 and almost all of AE38. In 2023 the BCRA will have almost USD 13,000 million.”
For today, economist Fernando Marull warns that negotiations must continue in the Senate. “Tomorrow there is a special session to recover retirement mobility and it is requested by Unión Por la Patria, Hacemos, UCR and Federal Coalition.”
For the consulting firm, this week the activity data for May (cement, automobiles, collection) is key, which “will help us know if the improvement that we saw in April continued in May or if it cooled down. Today the Ministry of Economy will report the collection that, surely, was good because Profits came in, a tax that is shared and improved the income of the provinces.”
