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Emmanuel Álvarez Agis: "Massa's plan could end with a rise in the financial dollar"


The former vice minister of economy warned that there is a risk that the measures will make dollar bonds fall further and overheat the CCL.

Sergio Massa's plan to contain financial dollars generated uproar

in the market and criticism from the opposition.

The implementation of an exchange to acquire (global) bonds in dollars from the public sector and the possibility of adding firepower with the sale of other dollar securities (bonares) pushed the MEP back from $388 to $375 and

the CCL, from $403 to $390.

But among economists

doubts persist

and they warn of a boomerang effect.

"The risk is that this operation ends with a drop in the parity of the bonds,

that is, that there is a sale in the market in dollars," said the former Vice Minister of Economy, Emmanuel Álvarez Agis, when analyzing the latest measures before the Clarín consultation. .

"If the price in dollars falls, the CCL rises, so paradoxically, at the end of the day we can end up with a higher level of CCL and lower parities," he added.


although the financial dollars fell in the last wheels, the bonds reacted badly to the announcements

with falls of more than 6%.

In the market they anticipate a greater indebtedness in foreign currency of the public sector when selling bonds in dollars to private parties, which could generate more downward pressure on the titles.

They also doubt whether the demand will be sufficient in the face of an eventual rain of bonars and the continuous drain on reserves.

For the economist,

the "confusion" derives

from the fact that the decrees made official this Wednesday 

could serve two alternative "opposite" purposes


The Treasury, he explained, could be made of bonds in dollars that are governed by foreign (global) law to carry out an external loan (repo) -Massa assures that it will delist them to improve their price-;

Or it could grant firepower to the public sector with the sale of dollar bonds under local law (bonares).

In the latter case, according to Agis,

the objective would be "to reduce the gap and absorb pesos,

which in turn could be used to finance the fiscal deficit."

To do this, it is necessary to intervene in the "parallel dollar" market or cash with liquidation (CCL), which consists of two bond markets: one local and one external whose only difference is that for the local bond (bonar) the law governs of Argentine courts and for the international (global) bond the law of New York.

In the local market, local companies and investors can buy dollar-denominated bonds using pesos.

Thus, if with $8,000 I can buy a bond that is trading at US$20, it means that the implicit exchange rate in that operation is $400, that is, the value of the CCL.

How is it that the Ministry of Economy can then influence the price of the parallel exchange rate?

"Given the difference explained above,

there are two ways to intervene in the parallel dollar market


intervening in the peso market or intervening in the dollar market

," explains Agis.

Therefore, to lower the CCL, one would have to go down $8,000 or up $20, or both.

To lower it in pesos,

the Treasury has to sell bonars against pesos,

instruments whose largest stock is in the hands of the Central Bank and ANSeS.

At the end of this operation, the Treasury sold bonars to the private sector and acquired pesos, increasing its net indebtedness.

"This operation has a macroeconomic impact similar to a sale of reserves in the official dollar market

, nothing more than instead of selling reserves (dollars today), the Treasury sells bonds (dollars tomorrow); in both operations pesos are absorbed", said the economist.

To lower the CCL in dollars, meanwhile, you have to use dollars to buy that bond.

That is,

sell dollars to lower the parallel exchange rate


But the IMF, in its latest statement, indicated Argentina's commitment not to carry out this latest operation.

Already in January, the Fund opposed the repurchase of global bonds with dollars.

Hence, the Government decided to choose to intervene with bonds without using reserves.

"A priori, and with several details to be defined,

the CCL containment strategy is not guaranteed to succeed.

As mentioned, at the end of the operation

there is a risk of ending up with a higher CCL level and lower bond parities.

On the side of the pesos, the Treasury would close its financial program, reducing the need for private financing," said the former Economy official during the administration of Cristina Kirchner



look too

Economy ordered to sell all the bonds in dollars: the unknown is who will want to buy them

The opposition criticized the exchange of ANSeS bonds and presses for Sergio Massa to give explanations in Congress

A bold move by Sergio Massa: use the Retirees' Fund to finance the fiscal deficit

Source: clarin

All business articles on 2023-03-24

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