Two major Wall Street banks warned of financial instability and forecast the price of the dollar

The echoes of the currency run that the Government managed to stop at the request of a strong intervention and new regulations in the financial segment reached the reports of the main Wall Street banks. Two recent publications, both from internationally renowned entities, Bank of America (BOFA) and Goldman Sachs, warn of financial instability and make strong forecasts not only for the coming months but, fundamentally, for after the change of administration after the elections.

For that date, although they do not necessarily anticipate the unification of the exchange market, they do anticipate a strong jump in the dollar prices.

“Reserves are at a critically low level, close to USD 1 billion. The risks are the highest since (Sergio) Massa took over as head of the Ministry of Economy. We see an (official) exchange rate of $485 by the end of the year,” published the BOFA, who in the table of projections on a set of currencies from different countries clarified that it foresees a rise in the blue to almost double its current price, at $850 at the end of December. More significant, meanwhile, is the projection of the price of the dollar for the third quarter, that is, the period in which the electoral cycle will be inaugurated with the PASO in August. According to BOFA, the official dollar will go from a price of $256 at the end of June to a value of $314 towards September.

Without sharing exchange rate projections, Goldman Sachs also published a report in which it analyzed the rise in the interest rate arranged last week by the Central Bank, which took it from 81% to 91% in annual nominal terms, and called attention to the “growing levels of financial repression”, the failure of price control plans and, above all, in line with BOFA, the low level of international reserves.

“The macroeconomic context continues to be very complex. Inflation is expected to remain in triple digits, there are increasing levels of financial repression and a significant slowdown in real activity is already taking place,” said the brief publication written by the entity’s economist with a focus on Latin America, Sergio Armella. “Policy credibility remains weak and the risk of an even more severe loss in monetary policy and price control is high. International reserves are running out, the government’s attempts to contain the increases have been unsuccessful, inflation dynamics have deteriorated, and the authorities appear to have missed, for the first time, the fiscal target established in the program in the first quarter of 2023″, synthesized Armella, who drew this panorama towards the end of last week when official intervention in the market began to take effect. The origin of the turbulence, according to Goldman, is found in a sum of factors: inflation, exchange rate delay, lack of reserves and a Central Bank with little credibility. “Along with the very high inflation (it accelerated to 104.3% year-on-year -7.7% monthly- in March despite the wide set of price controls in the economy), the weakened credibility of the Central Bank, a real exchange rate misalignment and a low level of reserves are the significant drivers of exchange rate pressures,” the entity said.

These pressures seem more contained today after the Central Bank intervened in the market with a strong sale of reserves and bonds, while today the new measures ordered by the National Securities Commission debuted, which had the expected impact: a setback in the prices of ” official financial dollar” -regulated- and greater pressure on the free dollar and on the segment called SENEBI, which once again had preponderance and closed in line with the blue, at around $374.

“The blue settled close to the Senebi dollar, the traditional MEP and CCL for retailers is now very low and in a short time it may closely follow the Senebi because it is a matter of time for the market to find a return to the latest regulation of the CNV”, considered the analyst and exchange operator Esteban Monte.

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