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Flat dollar and inflation still very high: What should be the best way to invest the pesos?

2024-03-06T12:06:41.893Z

Highlights: Flat dollar and inflation still very high: What should be the best way to invest the pesos?. Investors are torn between taking advantage of the fall in the gap to increase their positions in foreign currency and betting on the rate given by instruments in pesos. Within the universe of investments in local currency, those tied to inflation were the undisputed winners. The CER benchmark in February increased 22% in peso and 47% in dollars, leaving the rest of the alternatives far behind.


Investors are torn between taking advantage of the fall in the gap to increase their positions in foreign currency and betting on the rate given by instruments in pesos.


A little less than three months after the arrival of

Javier Milei

to the Casa Rosada,

investors

who in the run-up to the presidential change had sought

to dollarize at any cost are now

asking themselves

, following the abrupt fall in the parallel exchange rate in February,

whether to take advantage of this decline

to once again cover itself against a possible exchange rate jump or

gain with the rate in pesos.

Last month the parallel dollar fell to almost 14%

, which

depreciated the savings

of those who went out to dollarize at any cost in November and December.

"Hand in hand with the real appreciation of our currency,

all bets in pesos paid off in dollars.

The only exception was equities, which were exposed to a correction in hard currency," explained Nery Persichini of GMA Capital.

Within the universe of investments in local currency,

those tied to inflation were the

undisputed winners "The CER benchmark in February increased 22% in pesos and 47% in dollars, leaving the rest of the alternatives far behind. The few lucky owners of

UVA fixed terms

, the vehicle most reserved by banks, were the only ones that could exploit the potential of the acceleration of inflation," Persichini explained.

Going forward, although the market seems to be convinced that the

devaluation of the peso

and

exchange rate unification

are further away than expected days ago, the unknown remains, especially in a context where "the benefit" of the last exchange rate jump in December has already evaporated. against the inflation of recent months.

Juan Manuel Franco, of the SBS Group, noted: "In terms of

pesos,

we believe that the

short tranche of CER

is not attractive at these levels and we prefer the

medium tranche

, which we believe will better capture relative price adjustments, given that the implicit inflation in bonds looks low for some months despite the dampening effect of the recession and the erosion of real incomes.

"As for

dollar linked bonds,

we believe that an exchange rate unification will eventually take place, although the Government could avoid the discrete jump in the face of the heavy harvest, which is why

we prefer positions from 2025 onwards,"

he said.

"It is the strict exchange controls that in our opinion maintain the parities of the bonds in pesos, so indications about a potential exchange rate unification, reducing/eliminating controls, could imply capital losses," Franco highlighted.

Although the returns on

investments in pesos are attractive

in this flat dollar scenario, analysts recommend caution.

"The CCL has accumulated an appreciation of 30%

since the highs reached on January 22, reaching levels at the end of 2019, which suggests being cautious in positioning in pesos to carry ,

"

they said in the IEB Group.

In addition, they noted: "The rate differential between the CER bonds with negative rates and

hard

dollar bonds with positive rates of 30% plays in favor of the dollarization of the portfolio, although in the short term there may still be room to make rates already that the supply of exporters in the CCL, encouraged to liquidate due to the gap at levels of 27%, could continue to keep CCL stable".

For their part, Cohen's strategy team considered the

opportunity to invest in pesos in

high-quality corporate bonds.

"For the most conservative investments we suggest the risks in TGS 2025 (IRR 10%), Pampa in 2027 (IRR 10%) and YPF guaranteed in 2026 (IRR 9%) and 2031 (IRR 9%). For somewhat more moderate profiles, We recommend Mastellone 2026 (IRR 10%) and Aeropuertos Argentina at 2027 (IRR 10%)", they said.

S.N.

Source: clarin

All business articles on 2024-03-06

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