The Ministry of Economy announced on Tuesday night that it will intervene forcefully in the bond market to moderate the financial dollar price and achieve “economic stability.”
“Today there are State agencies that have bonds denominated in dollars, both with local legislation (AL) and with foreign legislation (GD). The former (AL) are not used for MEP/CCL,” they pointed out from the portfolio led by Sergio Massa, and detailed that the initiative aims at:
- place a part of the LAs on the market to generate depth,
- that the Mecon (in coordination with the BCRA) concentrate the management of the rest of the LAs that were not placed on the market and
- withdraw GD bonds from the market.
In this way, Economía expects to have the capacity to act in the financial dollar market without affecting reservations.
What does Massa hope to achieve with this measure?
Massa hopes to moderate the price of financial dollars
With this initiative, the Minister of Economy hopes to comply with a series of measures, which are detailed below:
- Allow to absorb excess pesos that otherwise put pressure on inflation.
- Manage to reduce debt in dollars with foreign legislation.
- Generate instruments to act in the financial dollar market WITHOUT affecting reserves.
- Concentrate the management of these instruments (today disseminated in different agencies of the Public Sector) in the MEcon, in coordination with the BCRA.
- Lift some exchange restrictions, as a first step towards a principle of normalization.
- Help reduce the volatility of the financial dollar market in particular, and the capital market in general, thus avoiding its impact, among others, on inflation.
- Equate the bonds with local legislation (AL) as a benchmark for the financial dollar market.
- Continue consolidating the treasury’s financial program
In this way, they hope to continue on the stabilization path to overcome the crisis of June 2022.
Blue dollar close to $ 400: why it touches a new record
The blue dollar jumped $8 on Tuesday, March 21, and closed a nominal record value of $394 In the midst of a scenario where the Central Bank’s currency bleeding is accentuated, there is a more adverse international context and bad economic data and versions of exchange measures have been added in the last hours.
In addition, most analysts had considered that the rise in the interest rate for fixed terms implemented by the Central Bank last week fell short, for which reason they predicted that the demand for the informal bill and financial dollars would continue.
The rebound of the informal dollar occurred on a day in which the BCRA continued to lose foreign currency registering a negative balance of US$99 million due to its intervention in the exchange market, with which it adds a red of US$1,239 million in March, and so far this year it has accumulated net sales of US$2,321 million
The blue dollar rebounded $8 on Tuesday and reached a new record of $394, although in the interior of the country it reached $397
Against this background, some analysts believe that The blue dollar could reach the $400 barrier this monthand they see an upward path forward given the current macroeconomic situation and the dollarization process that traditionally occurs in an election year.
Blue dollar: the reasons why it reached a new record
The financial analyst Gustavo Ber He maintained that “beyond the readjustment that had already begun in recent times, since financial dollars were perceived as lagging behind, and especially the informal dollar, which was lagging even further behind, they are rebounding faster amid rumors political and economic”.
“Among them are the growing tensions within the main political forces in an electoral year, the disappointing reading of the fiscal deficit, the intervention of Edesur, and a fall in reserves that is not sustainable, for which there is speculation about imminent exchange measures. “, he listed.
For his part, the analyst Christian Butler noted that the blue “is regaining ground” compared to the advance registered by financial dollars and the acceleration of inflation in March.
“Between January and February we had almost 13% inflation, and in March it is between 6% and 7%, and the blue dollar had not moved much. I think what we see is a little bit of regaining ground. Financial dollars, the CCL and MEP had even moved more. It is adjusting to those values that the others had raised”, raised.
According to his vision, “this movement was logical and expected.” And he explained that “the blue suddenly doesn’t move, or it does it very little, and when it rises it does so abruptly; then, it draws a little attention.”
The daily trickle of foreign currency from sales of the BCRA in the MULC is one of the factors of pressure on the blue
“But if you look at it in the medium term, it is not so strange. It had started the year being the most expensive dollar and then it had remained the cheapest,” he said.
The finance and agribusiness specialist Salvador Vitelli also linked the rise of the blue”mainly, to the delay that it was having with respect to the financial dollars that in the last two weeks registered significant increasesand the informal dollar had not copied that movement.”
“The fundamental cause is to get in tune with the financial dollars, especially following the CCL,” he emphasized.
Blue dollar: other factors that promote dollarization
the economist Natalia Butterfly He identified “three specific factors” that put pressure on a new rebound of the blue rebounded again. And he mentioned: the expectation that the Federal Reserve will apply a “rise in interest rates of between 25-50 basis points tomorrow, which affects emerging markets like ours; rumors that Sergio Massa is running out of instruments to stay until the elections and could resign; the rise in the CCL, which pushes up the rest of the parallel dollars; and the splitting versions”.
Likewise, the economist Federico Glustein He considered that “there are several situations” for it to rebound from the blue: “First, an outflow of funds to the Money Market to remain liquid but they are also dollarized. The return of income tax can also be part of it since they are fresh pesos that are generally transferred to free quotes.”
The economist also assured that the fact that “the BCRA sells foreign currency daily, yesterday exceeding US$260 million, a record that has not been seen for weeks, is adding pressure. “All this leads to maintaining positions in dollars and taking refuge,” he stressed.
As for whether they affected the splitting rumors, Glustein opined that “to a lesser extent, they may also have influenced.”
