The monetary expansion experienced in June 2022 led us to a strong rise in the value of the Dolar bluewhich went from $240 to a high of $350 in July, then leveled off below $300 in the following month.
That weights pump that was injected in the month of June ended up showing annual rate levels of 75% in September and rising inflation, which reached 92.4% annual in November.
What we are experiencing in the month of December is a situation with similar characteristics to that of June, with a high injection of pesos into the economy: the Central Bank issues for the purchase of Special Drawing Rights, for the purchase of soybean dollars, for the purchase of bonds in pesos to sustain the parities and to pay the interest generated by the Leliq. So, we wait for this December an additional issuance exceeding $1 billion (million million).
Dollar: what effect will the peso bomb have?
If we go back in time, this great monetary issue will leave as a balance a new rise of the blue dollarwhich would reach its maximum quota in the month of January, while the interest rate and the inflation they would be at very high levels in the months of March and April.
In this context, we should not rule out that the blue dollar in the month of january far exceed the level of $400. When it reaches said price, it would be convenient to arbitrate the positions of dollars towards pesos to seek to place itself in instruments that adjust for inflation, because the impact on prices will be felt in the months of March and April.
It is convenient to carry out an economic projection of the variables to anticipate market movements. Many times, critics disavow those who are ahead in the actions to be carried out, looking for a medium-term result, but investment strategies need time and maturation.
Blue dollar at $400, a possible reality for the summer.
While a few months ago we said that buying dollars at less than $300 was a bargaintoday we expect this investment to mature when it exceeds the level of $420. Above said value, we should convert these placements to pesos, to take advantage of the rise in prices that the economy will have, once the December issue makes its impact on the market, between 60 and 90 days later.
Yes Sergio Massa He would have studied how the market behaves, he would never have promised that in the month of March or April we would have inflation of 3%, because he would have realized that this can never happen if it generates such a high injection of pesos in the month of December.
The BCRA game and the coming inflation
As for the Bookings, in the first quarter of 2023 the commitments with the Monetary Fund amount to u$s6,345 million. Therefore, current reserves are transitory, not permanent. The reserves of the Central Bank, net of the volatility of what the IMF sends and withdraws quarterly, would be around US$36 billion.
The monetary liabilities of the Central Bank are a stairway to heaven. They grow at a rate of 100% per year, since remunerated monetary liabilities pay a rate of 107% per year, and the monetary base accompanies the monetization of the economy at a similar rate to give play to the market.
It must be taken into account that, from January to June, the demand for money in the market falls seasonally, therefore, there is more room for inflation and, consequently, a recovery in alternative dollar prices.
At this juncture, it must be borne in mind that the Central Bank and Anses are sellers of AL30 and GD30 bonds trying to suppress the rise in MEP and CCL dollars. This strategy is doomed to failure, therefore buying these titles in pesos could be a very good business, since we expect a significant rise, because they are the determinants of the alternative dollar quotes and, sooner rather than later, they will be following the price of the Dolar bluetherefore, surely, they would be located above the value of the tourist dollar.
The BCRA peso bomb, the origin of the current skyrocketing of the dollar.
The blue dollar and the Brazil factor
Historically, the blue dollar traded above alternative dollars, therefore, what we experienced in the months of October and November was an exceptional situation, the blue dollar will once again be in first place on the podium in the coming weeks.
Another not minor issue is that in January he assumes the presidency of Brazil Inacio Lula Da Silva (The real is currently at 5.30 per dollar). Brazil has a soybean crop of 150 million tons, which it will liquidate in the first months of 2023. This implies that it will export close to 80 million tons and has guaranteed a large income of dollars. If, despite this offer of dollars that arrives in the country, the real exceeds the level of 5.60 per dollar, and aims to leave behind the powerful resistance of 6 reales per dollar, we would be in a position to affirm that it is very probable that the Argentine peso has a second acceleration in the devaluation rate. A) Yes, We do not rule out that in the first quarter of the year the dollar will approach the level of $500.
The impact of the weight pump is felt
Argentina has a solvency problem, for which the fiscal deficit must necessarily be financed. Since we do not have credit, the State finances it with monetary issue, whose expansion is observed in every December of each year. This scenario can only be reversed when we achieve a fiscal surplus or external credit.
The monetary issue brings as an immediate consequence the rise of alt dollarswith some delay the increase in prices in the economy and, consequently, the rise in interest rates.
Inflation projections for the year 2023 would be around 115% to 120% per year. Meanwhile, the interest rate should be located at 85% per year, which would give an effective rate of 127.3% per year.
In this context, the dollar by the end of 2023 would have to be around $800, being very optimistic.
have projected a dollar close to $400 By the end of 2022 it’s like stealing a coin from a blind man, it was more sung than tango little walk. With overflowing issuance, there is no other way than devaluation, price increases and interest rate rises. The government is clearly looking at another movie.
