Although until a few months ago the Base Law (plus Fiscal Package) was, together with the volume of dollar purchases by the Central Bank, the main obsession of the market where analysts and investors anxiously awaited its advance as a sign of governability, its imminent approval no longer triggers The same enthusiasm is not enough to allay their fears. The main one of them is How will the third quarter of the year unfold?in which the inflow of foreign currency will decrease and, in contrast, dollar obligations will increase, impacting reserves.
This downturn, seasonal and even foreseen in the agreement with the Monetary Fund, could have been partially compensated with the benefits that the Government hopes the laws that are discussed in Deputies will bring. Essentially, the arrival of dollars from money laundering included in the Fiscal package. Also of possible investments, particularly in mining where there are advanced projects.
But the debate on the law was prolonged and, as a result, it is difficult for the effects to be clearly perceived long before the end of the year. Thus, although Congress’s approval of the laws sent by the Executive Branch is considered an indispensable step and the sanction definitive forecast that is expected at the last minute somewhat improved the climate of the last rounds for bonds – which remained stable after the increases on Wednesday – and stocks – which recovered -, exchange tension persists. Doubts persist, above all, about the second semester. The Central Bank sold USD 85 million again, which adds to the concern on that front.
In the third quarter of the year, foreign exchange income will decrease and, in return, obligations in dollars will increase, which will impact the Central Bank’s reserves.
A quick account indicates that, assuming a neutral result of the Central Bank in the exchange market In the next two months, that is, it cannot buy dollars but it does not sell either, about USD 5,000 million of the reserves accumulated in debt payments would be lost. The figure is higher than what President Javier Milei himself mentioned when referring to the goals with the Fund, according to which reserves could fall by around USD 3,000 million in the next three months, given the over-fulfillment in the first part of the year.
“This loss could be partially compensated with some dollar income from money laundering and investments,” said economist Fernando Marull in a conversation space with investors. That is to say, the Base Law that includes the Large Investment Incentive Regime (RIGI) and the Fiscal Package that includes money laundering, are necessary conditions although far from being sufficient, at least according to the asset prices on the market today, for pave the way to the exit of the stocks.
“The improvement in reserves was USD 12,000 million, the issuance to finance the Treasury is 0, financial surplus of 0.4% of GDP. Despite all this, the country risk does not drop below 1,400 points,” described analyst GMA Capital, who assessed that “this is hardly 100% political. The market asks for something something more.”
Along these lines, expectations are beginning to grow for the next moves of the Minister of Economy, Luis Caputo. At the center of the speculation is the expectation that, finally, in tandem with the Central Bank, the pace of the crawling peg (monthly devaluation today at 2%) to a rate closer to 5%, in line with the announced reduction of the PAIS tax. Those who evaluate this scenario consider it an intermediate path that would allow improve the exchange rate for export sectorsalso “non-agricultural”, without worsening the equation for importers.
However, this is not what Caputo said last week when in a forceful post on his social network account X he ruled out a devaluation and also maintained that the devaluation will remain at 2%
