The new one run would change which began last week apparently is not one more than this government had. Is that beyond what may vary the price of Dolar blue and financial exchange rates From now until PASO on August 13, what can be seen is the beginning of a process of strong dollarization of the portfolios of economic agents.
Due to the dynamics that it shows up to now, it would be a much more virulent process than the one that occurred after the PASO of August 11, 2019 where there was a drop in international reserves of 28,500 million dollars and an increase in the official dollar from 42 to 60 pesos in just 5 months.
So far in April the value of the Dolar blue it went from 390 to 435 pesos with a rise of 10% so far this month while alternative financial rose in the same proportion.
The seriousness of the current problem is that in the absence of some 20,000 million dollars that the BCRA will not be able to buy due to the effect of the drought on the exports of the agro-export complex The solution is sought with a new extension of the exchange rate and with a tepid rise of 3 points in the interest rate, taking it from 78 to 81% nominal per year, which will aggravate the problem.
More stocks to contain the dollar
The BCRA approved this Thursday a new adjustment to the dollar stocks that will affect payments in dollars abroad and leaves aside a more convenient alternative, which is a devaluation of the peso against the dollar in the official free and single exchange market (MULC).
These are measures that make it compulsory to finance the payment of the import of professional services and freight between related companies. In addition, prior authorization was provided for the payment of interest on intra-company debt. All of this, taken together, represents a postponement of payments in foreign currency for US$2,000 million until the end of the year.
The new exchange rate run that began last week apparently is not one more of those that this government had.
The BCRA explained that in the event that the creditor is a counterparty linked to the debtor, the prior authorization to access the exchange market to pay interest services on commercial debts for imports of goods and services and/or financial loans abroad.
In addition, the BCRA board authorized companies to make remunerated deposits for official dollar for the amount in pesos equivalent to the unpaid interest or the use of own available currencies that apply to the payment of commitments when the creditor is a related counterparty.
Why the BCRA resists devaluing
What is strange from the point of view of exchange rate and price policy is that the authorities of the BCRA they resist devaluing for fear that the devaluation will generate an increase in prices when inflation travels almost 8 per month, which is equivalent to 140% per year.
It is also incomprehensible that in the middle of a run it would change how the current BCRA does not raise the interest rate more strongly to prevent economic agents from disarming their deposits pesos and generate a strong flight of deposits from the financial system before the STEP.
The step after a run would change is a run banking. This begins with a drop in dollar deposits that leave the local financial system and deposits in pesos are transformed into dollars and also go abroad or ultimately flee to the mattress.
The first has already started since the beginning of April and the second is more contained by the exchange rate that makes it more difficult to transform those pesos into dollars and remove them from the Finance system.
Record dollar: a more virulent dollarization than that of the 2019 PASO
Dollar crisis: a complex situation
The BCRA continues to opt for the most complex situation, which is the increase in restrictions to obtain dollars at official exchange rate instead of devaluing the peso by a significant amount. The mistake is trying to adjust the quantity and not the price of the product called dollar.
The problem that aggravates lack of dollars in the economy is that at the official dollar price of 225 pesos no exporter sells their dollars and everyone wants to buy waiting for the future devaluation that will surely come at some point.
The other problem is that to the extent that the Dolar blue and alternative financiers raise the advantage of agricultural exporters and regional economies to settle at a differential exchange rate like the Agro dollar at 300 pesos is significantly reduced.
The other big mistake economic team it is trying to stop an exchange run through the sale of bonds in dollars in the market, which generates a negative effect, which is the sharp rise in country risk that has been observed since the beginning of this week. With these types of operations, the Treasury managed to make the prices of the Global Bonds and also the Bonares plummet. The weighted average price is around 25 dollars on average
Political uncertainty fuels the crisis
Analyzing the history of the bonds, the fall on Wednesday was the third most abrupt since the restructuring in September 2020. A study by the consulting firm Portfolio Personal Investment details that “the last time they had collapsed on a greater magnitude was on the 5th of July 2022”. It was the first conference after the resignation of the former Minister of Economy Martin Guzman. At that time, the weighted average price had dropped 13%.
Saving the distances with this difficult moment, the general context is very negative since the bad weather for the emerging creditAdded to that was a lot of political uncertainty following rumors of cabinet resignations and very little dollar selloff on the soybean dollar 3.0 framework.
The BCRA continues to opt for increasing the restrictions to obtain dollars at the official exchange rate instead of devaluing the peso
On the other hand, the Treasury with the objective of lowering the rise in the dollar CCL which are operations that are carried out between private parties, sought to intervene in the bond market by selling titles against pesos very aggressively.
“The sale of bonds (against pesos) does nothing more than lower the parity of the bonds, given the increase in their supply. In short, intervening alone selling bonds against pesos it only affects its price and the effect on financial dollars is ephemeral,” explains the consultant’s work.
Holding financial dollars at all costs
It is therefore quite strange that the Treasury would prefer hold the financial dollars at the cost of severely hitting bond parities. Orthodox exchange policy indicates that the only way to lower the price of financial dollars is by selling genuine dollars and not dollar securities.
Firstly, there is an increase in the legal spread due to the confusion of the general conditions and, on the other hand, a strong increase in the Indenture spread on global bonds. Specifically, the 38s/41s, those with the most robust legal clauses, are more defensive in this adverse scenario for various reasons.
With respect to the future exchange rate and as a negative sign, it should be noted that Wednesday’s meeting was the first in which no exporter settlements were registered, the soybean dollar in the three stages of the program.
As a positive fact, it should be noted that yesterday the BCRA bought 44 million dollars and resumed the positive balance after the implementation of the Export Increase Program (PIE). Wednesday’s nil sale added to Tuesday’s meager $36 million. For this reason, the Chamber of the Argentine Oil Industry (CIARA) distanced itself from the low liquidation, arguing that the commercialization of soybeans has been delayed by climatic factors.
On Thursday the BCRA bought 44 million dollars and resumed the positive balance
what’s coming
From the producer’s point of view, the reluctance to liquidate is very easy to understand with a simple calculation: until 04/05 the day before the release of the PIE III The producer received US$226.7/ton without withholdings ($90,000 per ton and the MEP was $397) while yesterday they were paying US$238/ton ($100,000 per ton and the MEP was $420). An improvement of barely 4%, which has already begun to decline with the rise in the parallel dollar and financial dollars.
Given this background, we should not be surprised if this new differential exchange rate scheme for the agricultural dollar at 300 pesos is not as successful as the previous ones. He new scheme It is applied in a context of higher inflation than the soybean dollar at 200 pesos in September and the 2.0 dollar at 230 pesos last December and in the midst of a new exchange rate run.
The financial specialist Salvador DiStefano points out that: “the government has no idea how much soybean remains to be liquidated from last season and according to our estimates there are only about 3 million tons of the 7 million that the government calculates and of the 8,000 million dollars that it estimates that The exporters are going to liquidate it, I don’t think they will amount to more than 4,000 million dollars,” the expert explained to Iprofesional.
One of the largest producers and exporters of popcorn He explained to Iprofesional that he will not use the new differential exchange rate because it works like a kind of merry-go-round that takes many turns to end up in the same place because of the Argentine bureaucracy. The businessman points out that for the BCRA approves you to settle your dollars at 300 pesos instead of the official dollar for which you would receive about 225 pesos less withholdings, you should follow the following administrative steps within the state structure.
The big question is whether this currency run will complicate the chances of Sergio Massa to be one of the candidates of the Frente de Todos (FDT) in the next presidential STEP on August 13. The rise in the monthly inflation rate of 7.7% in March was a hard blow that the economic team did not expect, the April number could aggravate the situation and now there is a new exchange rate run and a fall in bonds.
