It was a day marked by contradictions that show the disorientation of the market. For example, the government reduced the payment period for automobile imports by 60 days, which is a minimal relaxation of the restriction, and on the other hand, it went out to sell USD 85 million due to an unusual demand from importers. It endured a fall of USD 137 million in reserves when it most needs them to eliminate the restriction.
The dollar was a product of that disorientation and opened firm enough to break new highs, but ended up looking at the clock. The MEP dollar rose 17 cents and remained almost at the same value as the previous day. Cash with settlement (CCL) rose $4.94 (+0.3%) to $1,345.17. The “blue” made the grade by losing $10 and closing at $1,344.
From abroad, the news was not good: soybeans and corn continued to fall in Chicago, but wheat rebounded 3.5%, after a rally of losses that erased the good performance it had throughout the month.
The comment from the Rosario Stock Exchange was a reflection of the low activity. “The Rosario plaza exhibited a discreet level of operations in general terms, attributed in part to the local situation, which was evidenced by a smaller number of participants and open offers. Open proposals for the acquisition of soybeans exceeded Wednesday’s records late in the afternoon, although the volume of operations was limited. Finally, offers for wheat were focused on the available section, with no variations in values.”
This explains the low supply of CCL dollars from agriculture that forced the Central Bank to sell to satisfy importers. Reserves felt the impact and fell USD 137 million to 29,748 million.
According to the consulting firm F2, “at the local level we have a market awaiting the outcome of the processing of the Bases Law and fiscal package in Deputies, but also attentive to the evolution of the official exchange market and the reserves of the Central Bank (BCRA), something that has generated concern. In that sense, the outlook has not improved since the Central Bank once again assisted the market with USD 85 million, after the 76 million contributed the previous day, due to the fact that the liquidation of exporters was once again insufficient to supply the demand with access and the average BCRA balance for interventions in the exchange market in the last 5 rounds falls to –USD 45 million. Both the frequency of assistance and the amount have become a problem for the accumulation of reserves. July debt maturities in foreign currency are approaching and speculation is growing about a correction in the exchange rate.”
F2 adds that “although it is not possible to affirm that there is a direct relationship, as soon as the BCRA result data was known in the exchange session after 4 p.m., the CCL responded upwards, an indicator that the market is very sensitive to this factor.”
Regarding the futures market, “it adjusted again with increases throughout the curve after the cut they suffered in the previous round. Except for June 2024, which was very sensitive to price variations due to the proximity to expiration, the implicit ones rise, but do not reach the records of June 25 when they exceeded 80% of the annual effective rate.
An important fact is that premiums continue to be paid above the peso curve in the shortest part, which is interpreted as a hedge against an exchange rate adjustment. The market is facing a devaluation in the coming months.
He trader Adrian Wibly provided an interesting perspective on the topic. “The LECAP curve came a little closer to the rates of Wednesday’s auction and those that expire in January and February 2025 are already at rates between 4.6% and 4.7% per month. On the other hand, the rates of the dollar futures from August to January 2025 are close to 4.8% per month.” This can be seen as an acceleration of the crawling which is at 2% monthly.”
Peso bonds adjusted to the auction rates. The longer LECAP fell 1% and CER bonds continued to fall even though everyone expects a recovery because their parities are excessively low.
Dollar-linked bonds (linked dollar) continue to rise. The Bonte T2V4, which matures on September 30, rose 3.42%. The CER Bonds fell by up to 1.15% in the version that matures in December. The Dual Bonds rose slightly in those that mature at the end of June, but this was due more to inflation than to devaluation.
The increase in dollar holdings by investors has caused them to turn to Corporate Bonds. In recent days, investment funds have put together specific portfolios for investors to invest the dollars they have recently purchased. There is a strong arbitrage of Negotiable Obligations in pesos from companies to similar ones in dollars because they are betting on the exchange rate liberation, that is, on the elimination of the restrictions.
Sovereign bonds performed dissimilarly. They combined increases and decreases that caused the country risk to rise 16 units (+1.1%) to 1,445 basis points.
The Stock Market had an interesting recovery with business growth to $27,347 million. The Merval of the leading stocks rose 3.9% in pesos and 3.7% in dollars. The most notable was Telecom due to rate deregulation (+9.75%), followed by Aluar (+.06%) and Ternium (+8.03%).
The ADRs – certificates of holdings of Argentine shares that are listed on the New York Stock Exchanges – had an overwhelming round where Telecom (+8%), Transportadora Gas del Sur (7.5%) and Central Puerto (+5.9%) stood out. %).
Today the market will have its eyes on two places: the Free Exchange Market (MLC) to see if the Central Bank continues with its selling trend, and the Chamber of Deputies for the result of the Ley Bases.
