The blue dollar rose $2 this Friday and closed at $287, while the financial dollars that are traded in the stock market -counted with liquidation (CCL) and MEP- ended with a slight upward trend, after climbing sharply during the session . So much so, that the CCL reached $319.
The blue climbed $10 this week, the highest weekly rise in two months, and the gap with the official wholesale dollar ($145.44) was 97.3%. Meanwhile, the CCL closed at $312.46 compared to $301.15 the previous Friday, while the MEP closed at $303.71 against the $293 quoted seven days ago.
Analysts attributed the overheating that financial dollars showed this week to a mix of local factors and the impact of a more adverse international scenario after the rise in interest rates by the Federal Reserve.
So far in September, the BCRA has added purchases for US$3,320 thanks to the settlements driven by the soybean dollar, which has already exceeded the objective that the Government was seeking of US$5,000 million.
But analysts say the level of net reserves continues to be criticalfor which they consider that “It is inevitable” that exchange measures will be adopted in the coming days before the end of the soybean dollarwhich in principle ends on September 30, although there is some speculation in the market that it could continue.
Most analysts surmise that the scheme of differentiated exchange rates for some sectors could be deepenedand note that that “would continue to put pressure on financial dollars”.
Financial dollars jumped this week, the CCL on Friday touched $319, although it closed at $312
Financial dollars: the causes of the escalation
For some analysts, in the initial rally that the CCL and the MEP had this Friday, which later moderated, the negative international climatemotivated by the sharp falls in sovereign bonds and Argentine stocks abroad.
Among the local reasons that drove the CCL and the MEP this week, in the market they point to “excess weight” due to the large monetary issue of the Central Bank derived from the soybean dollar scheme, inflation in September that remains high -some already estimate 7%- the distrust generated by the stocks to agro-export companies that liquidated the soybean dollar, which will not be able to access the official exchange market or operate with MEP and CCL, and the rumors of changes to the tourism dollar or card, for which purchases are advanced in the parallel market.
About, Emiliano Anselmian analyst at PPI, linked the surge in financial dollars “to the flow of new pesos that continues to imply the soybean dollar, it is already almost 1% of the GDP of issuance”.
the financial analyst Christian Butler He agreed that “the broadcast was overwhelming. And he emphasized: “Tell me how many pesos you are going to issue and I will tell you how much the dollar can reach.”
the economist Natalia Motyl attributed the reaction of the financial dollars this Friday “to the latest decisions of the FED to raise interest rates and the rumors that a new exchange scheme is coming, which drives the demand for these dollars.”
For Juan Pablo Albornoz, Invecq economist, influence the rise of the CCL and MEP “the whole battery of restrictions and regulatory twists and turns that we saw this week, and what is happening on the international front, after the rise in rates by the FED, the adjustment of projections , how hawkish Jerome Powell was discursively”.
The bad international climate that caused local bonds and stocks to fall on Wall Street boosted the rise in financial dollars
“This combo of rate hikes and lower growth generated a strong repricing in financial assets, and strong pressure to depreciate currencies against the dollar, where the peso is not excluded,” he explained.
In tune, the economist Frederick Glustein related the jump of the MEP and CCL this Friday to the “sharp fall of the ADRs for fear of a global recession with a strong rise in the interest rate by the FED that pushes local bonds down and to the refuge to the dollar currency that is strengthening.
Of equal reading, the analyst Franco Tealdiremarked that it was “a very bad day for global fixed income, the FED’s speech and the strength of the dollar in the world makes investors flee from risk positions, and that fuels the rise in the CCL and MEP”.
Paul Repettohead of Research at Aurum Valores, also said that “today is a very negative day at a global level and the additional jump may have to do with the global context.”
In turn, Motyl argued that “Until February 2023 you enter an adverse international context for our country due to the lower global liquidity given the more restrictive monetary policy of the main central banks in the world, a lower demand for basic products, the elections in Brazil that suppose a change in the rules of the game and a transition period until the new government, and the outflow of capital from emerging countries like ours for the most attractive rates in developed countries.
Dollar: are new exchange measures coming?
Against this background, the Analysts believe that “it is inevitable” that there will be new exchange measures to face Octoberwhen the soybean dollar will have ended -according to what has been announced so far-, because they consider that returning to the situation prior to that measure is not enough to strengthen reserves.
The market anticipates next week announcement of exchange measures before the end of the soybean dollar
Sebastian Menescaldidirector of Eco Go, maintained that “by October 1 they have to do something, they know that this exchange rate of $145 is not useful to them, all the dollars you had in September you will not have later because there will be less offer because sales were anticipated, and that the BCRA has bought expensive to deliver it tomorrow does not make sense, they have to do something else.
“If they don’t do anything, nobody is going to want to liquidate; and on the other hand” assured the economist who asserted that “just accelerating the crawling peg and raising rates is not enough”.
Anselmi agreed that “without a doubt something is coming from October 1 because the supply of agriculture is going to fall very sharply once the soybean dollar ends, andThe flow of the MULC (official foreign exchange market) will turn negative again if it returns to the status quo pre soybean dollar”
Adrian Yard Bulleran economist at Facimex, warned that if “the economic team tries to return to the prevailing situation until August, the net reserves are going to feel the impact”.
Differentiated exchange rates, splitting, devaluation?
Yard Buller said that “starting in October, the foreign exchange market will not be like before and we believe that we are likely to see a deepening of the differential exchange rate scheme”.
Menescaldi intuits that “there will be something combined between put a different exchange rate for tourism because you have the demand that is coming for the soccer world cup and the holidays, and for some other sector, and more stocks, that is, more restrictions on imports”.
Analysts predict that there will be changes in the tourist dollar to stop the outflow of reserves through this route.
He ruled out the possibility of a devaluation jump “because devaluing without having a stabilization program behind it doesn’t work either.”
With the same diagnosis Motyl thinks that “they are going to aim to deepen the preferential exchange rate scheme, It is very likely that they will extend the soybean dollar until the end of the year and extend it to other sectors”and stated that “a devaluation that unifies exchange rates implies a political cost since it affects the non-tradable sector and, fundamentally, the wage earner who is the most important nucleus of voters, I do not think that Massa is willing to assume it today.”
For Albornoz, “it is expected that the BCRA will continue to validate a higher rate of exchange rate depreciation to close the gap from below, and changes in the tourist dollar, possibly we will see that the next deficit to attack consists of reducing the trickle of reserves that is produced by tourismwhich includes both credit card expenses and passenger transport”.
The analyst also speculates that “the soybean dollar opened the doors to a scheme of multiple differential exchange rates.”
At the same time, repeat judged that “it would seem that there is little predisposition to an abrupt jump in the exchange rate and that they would turn to a scheme of multiple exchange rates in the style of what (Axel) Kicillof preached before arriving at the Ministry of Economy”.
“Experiments of this nature seem inauspicious to channel the imbalances that exist in the macroeconomy. Let’s hope they present a broader plan that implies stabilization because if not, everything will be seen as a temporary shortcut,” he predicted.
Multiple exchange rates and more stocks as expected by the market will put even more pressure on financial dollars
Financial dollars: the risk of multiple exchange rates
Analysts agree that deepening the multiple exchange rate scheme implies the risk of continuing to put pressure on financial dollars given the issuance of pesos that it entails.
Glustein speculated that “dollar for technology sectors, for the export of agricultural products in general, an increase in taxes on the tourist and solidarity dollar, a greater trap and acceleration of the crawling peg, are all measures that could be taken to prevent them from leaving the reserves or that the cost is higher”
“And in that respect it will be difficult to stop the rise in financial dollarssince the greater the restriction, the higher the prices rise,” he warned.
A report of LCG also warned that “The option of multiple exchange rates has an additional difficulty and that is that it leaves pesos on the street that can put pressure on the free dollar.”
Likewise, Menescaldi predicted that “with more stocks and differentiated exchange rates, financial dollars will probably overheat,” but he alleges that given the urgency of rebuilding reserves, that for the government takes a backseat.
In any case, the economist argued that that greater exchange rate gap “can complicate on the side of inflation”.