In a market without good news to encourage it and with several warning lights on, the dollar operated upwards yesterday in the same tense tone that was warned for all Argentine assets. It was a bad day consolidated the negative trend that appeared towards the end of last week: the cash with settlement (CCL) returned to $1,300 while the Stock Exchange dollar or MEP rose 4.5% on the day and reached its record in nominal terms. It is known, in retrospect, that since he took office the dollar has lost by far the race against inflation, but the rapid recovery of ground in a few weeks has generated concern. All within the framework of growing political tension that is beginning to generate noise in the market, where they are still waiting for the lengthy Bases law.
“It is not a mathematical question, expectations and If this jump goes to prices, we will re-enter the vicious circle“, worried an experienced exchange broker who was sincere: “I didn’t like today’s movement at all.”
The thing is that behind this concern there can be listed more than one reason or conflict that is difficult to resolve while it is difficult, at this point in economic management, to identify which one will from now on be a driver of new increases. This is because the Government’s main achievement, the much faster and more pronounced fall in inflation than expected – an index below 5% is expected for May – is threatened not only by the eventual return of certain financial instability but also for the relative price correction process which is far from over. This, in a context in which the economic recession is beginning to sound the alarm bells of social humor and some key data that combine to generate a complex climate in the financial market.
The first of these data is purely economic. Given the obvious risks posed by the Central Bank’s current consolidation strategy based on a negative rate and migration of debt from the entity to the Treasury and the greater difficulties that were evident in recent weeks in accumulating reserves, the market took note of an account which until now had not been given so much attention: negotiations with China to defer payment of USD 5 billion for the section used by the previous government of the swap have, for the moment, an uncertain result and everything indicates that the Government will have to cancel these funds with reservations, in two installments.
“On the weekend it emerged that the renewal of the swap with China is not closed, therefore, if this situation does not change, Argentina would have to pay almost USD 5,000 million. As a consequence, the dollar that had started to rise on Friday continued to rise and the sovereign bonds that had started to fall on Friday continued to fall,” they stated in the IEB Group.
The first of the swap installments would fall this month, for USD 2.9 billion, while in July the USD 1.9 billion must be disbursed to bondholders. Without ever exposing these figures in the foreground, the truth is that the economic team always contemplated the obligation and admitted from the beginning that the payment would be a bitter pill to swallow for the reserves. The surprise, for everyone and everyone, is that given the strong inflow of foreign currency during the first quarter, A much more comfortable situation was expected at this time of the year. based on a massive liquidation by agricultural producers that was not confirmed. At least not in May, there are those who believe that the seasonal peak may have been postponed to June.
“The thick harvest and its liquidation have already started. In fact, in May it accelerated a lot. In April it was delayed, mostly due to the effects of the rains. That may have caused We will see the seasonal peak of May in June“, considered Eco Ledesma analyst Gabriel Caamaño, who identified other sources of pressure on the dollar beyond the low trading volume (synonymous with foreign exchange income). Among them, greater access to the market for importers and a lower income of foreign currency from the energy sector, which had contributed a good dose of foreign currency during the first part of the year.
