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Economic announcements are postponed and all the market's attention is on the dollar

2023-12-11T01:27:41.364Z

Highlights: Economic announcements are postponed and all the market's attention is on the dollar. Regardless of what Milei says, the market will look at what Luis Caputo's first actions are. Over the weekend, the "crypto dollar" moved calmlyExpectation for some modifications to the exchange rate clamp. The new economic team warned that there may be no announcements this Monday either before the opening of the markets or after the closing. The official wholesale exchange rate, which closed at $364.41 on Thursday, will not jump on Monday.


Regardless of what Milei says, the market will look at what Luis Caputo's first actions areOver the weekend, the "crypto dollar" moved calmlyExpectation for some modifications to the exchange rate clamp


The market is still paying attention to Javier Milei's first economic definitions as president, after an inaugural speech in which he placed great emphasis on the inheritance received and the need for a rapid adjustment to stabilize the economy. The announcements, which were expected early on Monday, would be delayed and all investors' attention is focused on the opening of the foreign exchange market.

It is possible – but not certain – that the official wholesale exchange rate, which closed at $364.41 on Thursday, will not jump on Monday. The new economic team warned that there may be no announcements this Monday either before the opening of the markets or after the closing. "In 2015, Federico Sturzenegger only released the exchange rate on December 17, a week after the inauguration of Mauricio Macri." That day the wholesale dollar jumped from $9.83 to $13.76," they recalled

It had been speculated that Minister Caputo would speak this Monday at 8 a.m., but in reality at that time only the presidential spokesman, Manuel Adorni, will speak, although it is not expected that he will speak specifically about measures of an economic tone. The first Cabinet meeting is scheduled for 8:30 a.m.

The inaugural speech of Javier Milei's presidency was forceful: the magnitude of the inheritance leaves no room for gradualism, the lack of internal and external credit does not allow for further postponement of the adjustment, which will fall on the public sector.

The president avoided referring to two issues that were his workhorse during the campaign: the dollarization of the economy and the closure of the Central Bank. Nor did he elaborate on how he will carry out the brutal spending cuts he is proposing.

In a market that takes for granted a devaluation of the peso as part of the new government's first measures, the speech was not surprising. After Javier Milei finished speaking on the steps of the National Congress, the crypto dollar climbed to $1,160 in its highest selling band, but in the most representative places of the market it remained close to $1,050.

Although it is not a very representative segment due to the volume of operations it moves, as it is the only price that moves 24/7, that of the cryptocurrency usually serves as a "clue" to anticipate the trend that the rest of the versions of the US currency will take when the wheel begins to operate.

In the City they believe that the initial reaction of the market this Monday may be positive, although they expected that the price movements would be tied to the definitions that could emerge from Luis Caputo's first press conference as Minister of Economy and the package of measures that will be presented next.

Finally, it was learned that early on Monday the head of the Treasury Palace will not speak, but the new presidential spokesman, Manuel Adorni, will speak.

Thus, all the eyes of the market are on the first positions made by the Central Bank in the Single and Free Exchange Market (MULC) after on Thursday, on the last working day of the government of Alberto Fernández, the official dollar exceeded $400 on the screens of the Banco Nación.

The great unknown in the City is whether the new government will take the official dollar to $650, a value that the Minister of the Interior, Guillermo Francos, spoke about a week ago, or if it will validate a higher exchange rate. Many warn that, with inflation already expected by the president himself to be over 20% this month, the initial jump should be greater to contain expectations.

Beyond the devaluation, the eyes of the market are also focused on possible measures to "de-complexify the exchange rate clamp". In his speech, Mlei avoided referring to the end of exchange restrictions, but analysts believe that within the first measures there should be signs of releasing some of the obstacles to operating in the different markets, especially in the financial market.

Pablo Repetto, of Aurum Valores, said: "The market is going to give a vote of confidence if the signals are fiscally sound, but also if they go in the direction of removing regulations and releasing (as much as possible, with some caution) many of the obstacles of the markets." In that sense, he added: "There are rules in place that are only useful if you are going to intervene in the market and in another context they are not necessary."

"Regardless of what Milei says, the market is going to be watching what Caputo does. If it devalues or not, at what level," said Sebastián Menescaldi, of Eco Go. "I don't know if there's room to get foreign exchange restrictions out of the way. We have to realign variables and perhaps use an exchange rate that is higher to begin with, so that we can then take the exchange rate variable as an anchor in the first months of the program," he added.

Source: clarin

All business articles on 2023-12-11

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