After several days of high volatility, some stability was achieved in alt dollars last week. How long can it last?
By Christian A. Buteler
08/05/2023 – 15,22hs
Los alternative dollarss closed on Friday at $432 for the MEP, $456 for the CCL and $469 for the blue, showing stability and a decrease in relation to the previous week. This last run we saw the dollars jump from $390/$400 to almost $500 and then back to current values. How will the movie continue?
The first thing we must take into account is that it is not sustainable a dollar price stable or downward in a context of price increases of 7%/8% per month, therefore, beyond the fact that in the face of the intervention that the government is carrying out today, both with dollars and with bonds, prices could fall a little more, the nominal trend of the dollar is rising. In fact, the government does not pretend that this is not the case, but to avoid sudden jumps.
What the government tries to avoid, and this is how it should be, are movements like the ones we saw where in just 2 weeks the dollars jump 20/25%. This always has an impact on the real economy through different behaviors, from companies that prefer not to sell for fear of not knowing at what price they will be able to replace the merchandise later, expectations of devaluation of the official dollar, withdrawal of deposits in dollars from the financial system and direct transfer to prices that in a context of high inflation, no price reference and constant issuance ends up being validated.
Even beyond subsequent measures such as rate hikes or the financial market intervention can lower the price of the dollar the prices of goods do not. The run is contained, volatility is decreased but the damage done is maintained.
Will the dollar fall further or will the uptrend return?
So the first conclusion we can draw is that the dollar You can go back a little more, take a break, but the underlying trend will continue to be upward.
The second question we ask ourselves is whether we can once again have runs against the dollar unfortunately the answer is yes.
After several days of high volatility, some stability was achieved in alt dollars last week. How long can it last?
And so it is for the macroeconomic weakness of the government which is expressed in the lack of dollars now deepened by a historic drought.
Risk factors are extensivefrom the frequent dollarization in electoral years in the face of the uncertainty generated by a new government, going through the strong debt maturities in pesos that make a significant mass of pesos available to investors every month, to the excess of pesos from the economy with a Central Bank that does not stop issuing.
Investments: what signs we should pay attention to
What signals should we be aware of, obviously the price of the dollar, but it is not the only one. The daily variation of reserves is unsustainable once continued loss of reserves like the one we are seeing where so far this year more than US$ 10,000 million have already gone. The behavior of private fixed terms in pesos, which up to now has not presented any problems. Debt renewals in local currency that, despite the crises, are able to renew 100% of the maturities, with the help of the BCRA and other public bodies. The private deposits in dollars that since the beginning of the run have already fallen by more than US$ 1,000 million and the issuance of pesos that is not only carried out to assist the treasury directly but also indirectly with the agricultural dollar and the purchase of bonds in pesos.
What tools does the government have to deal with a new bullfight, really few. Before the shortage of reserves What limits their possibility of intervening is that of operating with bonds to maintain financial dollars. This tool, of limited effectiveness, is the one that the government tried to prepare when it launched the public sector bond swap, but it was not available in a timely manner.
Thus the best scenario for the government would be a dollar rising in line with inflation, some month it could be a little lower and another a little higher but avoiding the sudden jumps that we have seen in the past weeks. But unfortunately, the most probable scenario is that we will experience other bullfights between now and the delivery of the mandate, when and what events will trigger it is impossible to know, but the chances of occurrence are high.
Given this framework of uncertainty, the best thing that can be done to deal with it is diversify our savings taking advantage of the high rates but also the instruments that adjust for inflation and an important part with exchange coverage for which you can choose from bonds, cedears, negotiable obligations and bills (which more than investment is a refuge).
Not to trust yourself, not to pay anything for dollars and always keep your guard up, 2023 will be as difficult as it seems.
