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With the dollar tense and stocks soaring, is the rate hike coming?

2021-09-08T00:05:08.964Z


The Central Bank increases intervention to keep the price of the US currency at bay. The pre-electoral movements of the market have already appeared.


09/07/2021 19:56

  • Clarín.com

  • Economy

Updated 09/07/2021 20:56

Part of the film of the unusual Argentine economy is that apartments are bought with

cash dollars

and a pair of sneakers in up to twelve installments.

Buyers of

0 kilometer cars

 find out after paying for them that in the course of the month they will tell them when they will deign to deliver it and there are used cars that exceed the price of new ones due to lack of units.

These are just some examples of the cavalcade of prices and the lack of dollars that continue to deepen the imbalances of an economy in which the government tries to

fill the population's pockets

to boost consumption, but job uncertainty and inflation close to 50 % per year dilute the impact.

In the Central Bank they count the

income of

dollars

one by one, 

because the liquidation of the exports of grains and oils diminished, and the proximity of the PASO, generated the traditional decision of

"unsaddling until it clears up

.

"

On the other side of the scale, imports continue their march to the point that in August US $ 100 million more than in June were recorded (it had been US $ 5,909 million) for the purchase of energy abroad and the data turned on

lights yellow

on the control panel of the Central.

Since the beginning of September, the Central Bank intervened in the market selling more than

US $ 300 million

and put a temporary end to the times of exchange surplus, probably until the end of the year.

Simultaneously, the pre-electoral bets of the financial operators appeared, which drove the prices of the

shares

of private companies and public bonds.

The "rally" that began on August 20, says the consulting firm Quantum, shows that 

"stocks are the ones with the highest relative rise"

(compared to provincial bonds), followed by sovereign debt (bonds that are now closer to US $ 40 starting from the US $ 30 before June).

Measured in free dollar,

stocks rose more than 14%

and bonds around 8%.

A strong improvement starting from very low levels.

A WolfTrading tweet records the variations of some Argentine assets between the

PASO

of 2019 and the present, highlighting the large relative loss against the rise of the dollar and inflation

Thus, while the

dollar counted with liquidation rose 283%

in the period and

inflation was 123%

, the assets of some of the main companies in the country grew between 9 and 62% without taking into account those that, because they are linked to service contracts with the state, gave negative numbers.

The soaring of

the free dollar "made

Argentina significantly

cheaper" 

and now there are officials who are pressing to advance the opening of the borders, so that tourists from abroad come to increase the supply of dollars in the blue market.

All quite tied with wire even when the Central prepares for Congress to have a budget expansion to be able to

pay US $ 1.9 billion to the

International Monetary Fund on 23 of this month.

The dollars come from the IMF's extraordinary transfer of US $ 4.33 billion to meet needs due to the coronavirus pandemic,

but which will be used to cancel debts with the organization. 

Far was the

Senate statement

promoted by the official senator Oscar Parrilli, last May, who urged the Minister of Economy to allocate that money to the expenses of the pandemic.

Vice President 

Cristina Kirchner

 turned on the fly when verifying that the Central Bank can be left with few dollars at the end of the year (net reserves would reach around US $ 3,000 million), and that what is needed for the first quarter of 2022 ( about US $ 3.9 billion are due in March) will require

strong decisions at the end of the year.

But while in the dollar segment the cards are turned upside down, in the peso segment

the bid between the Ministry of Economy and the Central Bank is on the rise

.

The difference, which is not minor, revolves around

determining

who absorbs the excess pesos

from the economy in the event of a possible jump in the issue, if the government generates a rain of pesos in the attempt to win the November elections.

In the Central Bank they say that they already have enough with the monetary liabilities (liquidity letters and monetary base) for $ 4 trillion that oblige them, in the case of the LELIQ, to

pay 38% per year to immobilize the money and prevent the surpluses from going to the purchase of dollars.

On the other side, the Finance bond bids are a test for a market that is increasingly demanding titles with

shorter terms and tied to inflation,

considering that it is what yields the most.

This Thursday there will be a new auction to cover

maturities for $ 247,000 million

and the attention is focused not only on the amount that the government achieves, but also on the cost of borrowing.

Until now,

between the stocks and the liquidations of the field

they allowed the government to finance itself at negative rates compared to inflation, but times change and the expectation that the PASO on Sunday could generate another climate for one side and the other leads to the question:

Who can rattle the cat of the rise in the interest rate in pesos?

Source: clarin

All business articles on 2021-09-08

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