The market is already looking at the scenario of the next change of government and, whether by the ruling party or by the opposition, he hopes that whoever continues in 2024 at the head of the control panel will be more “friendly”. In this context, signs of what is to come begin to emerge and a key indicator is the dollar arising from the futures market.
Over there, The first contracts with maturities within the next presidential term began to be agreed upon. What do these contracts say? In short, the official dollar implicit in them is $366 as of December 2023 (versus an official price that today is just over $194).
It must be considered that the dollar futures contracts they are, strictly speaking, exchange insurance. There is no handling of dollars per se, but of pesos that raise interest rates based on expectations. They are the best tool the field has to ensure prices.
Andrés Reschini, from the consultancy F2 Financial Solutions, commented to iProfessional that the effective annual rate implicit in the first contracts to December, with the new tenant in the Casa Rosada, it is from 96%, which implies a sato of the “A3500 dollar” (the official one) of that magnitude. “It seems reasonable because it follows, more or less, the path of inflation estimated for this year,” explained the specialist in financial markets.
Dollar: what will happen to the rate of microdevaluation?
What would have to be seen is if the next administration is going to continue with the policy of a crawling peg (daily mini-devaluations) slightly below inflation or if it is going to accelerate to avoid the delay of the official exchange rate. Last year, inflation reached almost 100% but the dollar rose 60%.
Currently, among the different futures markets, Rofex, Matba and MAE, there are open positions for US$3.7 billion, but US$3.3 billion of them correspond to the traditional business center of Rosario, in Santa Fe. The MAE , which is more used by banks, fell 64% compared to a year ago.
The future dollar market anticipates a value of $366 in December 2023.
A key issue is that the devaluation rate implicit in the contracts doubled in relation to those agreed to in November. This marks an uncertainty regarding what a next government could do. If until November it is thought that the Central Bank can continue with a policy of delaying the dollar, in December it is believed that it could change.
While the effective monthly rate for the contract of november of 2023 is from 4.8% against the previous month, for those of December it is 9.4%. According to estimates made by Reschini, the Central Bank currently has open contracts for only US$587 million. At the end of 2021, it had open positions for US$4.5 billion. It could intervene in the market for a ceiling of US$9,000 million, according to what the agreement with the Monetary Fund indicates.
The economy, already on a “market friendly” course
What the markets are clear about is that the change of economic regime has already occurred. “The most relevant thing is that the two political coalitions began to walk in the same direction; for example, lowering the fiscal deficit and inflation,” said Adcap Grupo Financiero in its latest report to the press. Javier Timerman’s consultant maintains that “We believe that the regime change that the market expects has already occurred with the departure of Martín Guzmán from the Government“. And the consultant states: “The direction that the economy began to take is much more market friendly.”
For the analyst and consultant Salvador Di Stefano, the problem of the Argentine economy is fundamental and, therefore, if important changes are not made, the difficulties will reappear.
“The government makes a serious mistake, it thinks it has a liquidity problem when, in reality, it has an economic solvency problem,” says Di Stefano.
“If the government focuses on financing the deficit, but not on reducing it, it is in serious trouble that will be greater in the future,” he explained. The analyst, for instance, described the bond repurchase operation announced by Massa as a “mistake”. “I would always have to have priorities. Today, the first thing to do is reduce the fiscal deficit to a minimum, not buy back debt,” he said.
The market interpreted the arrival of Massa as a “pro-market” turn of the Government.
If the latest data from the Central Bank related to the Multilateral Real Exchange Rate (TDCM), the value at which the official dollars are sold by the monetary entity would only be 5 percentage points of the equilibrium level. In other words, with a small correction it could balance this variable, which, although it is not taken into account by the financial system, makes sense for trade purposes. The TCRM is an average of the price basket of Argentina’s 12 main trading partners and, therefore, would mark a point at which the price of the dollar would be ideal for both exports and imports.
The problem is the gap, which generates uncertainty and, consequently, expectations of devaluation. The idea that the price of the official dollar is half of the free dollars generates pressure from importers and discourages exporters from liquidating.
