2023-10-13 16:51:00
This was a short but intense week, in which the market began to crack and led the free currency to operate at $1050. As of yesterday, Thursday the 12th, it already closed at $980 on the eve of the XL holiday that is in progress, and although It is still $100 above Friday the 6th, began to trim the mid-week rally. But For that to happen, some events took part.
The bank run took presidential candidate Sergio Massa off the plane, who was regarding to begin a federal tour prior to the elections. The situation of uncertainty led him to put himself in the position of minister and decide to go following the creators of the situation. “I’m going to call out those who are speculating with people’s savings even if it costs me the election.”“, he assured and launched several containment operations in the City of Buenos Aires and in other places in the City of Buenos Aires. Even, He gave a “face” to the “4 or 5 alive” that he accused of being responsible for the bullfight.
Milei responded to accusations of making the blue dollar rise
In that movement, an international alert was released to prohibit “El Croata” from leaving the country. Ivo Sebastian Rojnicalleader of Nimbus Group, considered by the government as one of the most important operators in the City and marked as main in terms of informal currency in the business and financial core of the Buenos aires city.
In the middle of the situation The government also targeted the libertarian candidate Javier Milei who would have recommended people not to renew fixed terms. A whole combo that resulted in a panic situation that led small savers to look for the safest thing they know: the dollar.
Also, rate hikes
The market had been expecting a correction in the rate increase, and following knowing the September index published by INDEC and which reached 12.7%, the BCRA defined a significant increase for fixed terms that now reaches 133%, especially to contain the strong outflow of deposits in pesos that has been seen since September.
In this regard, the BCRA said “In September, the monthly inflation rate was 12.7%, driven by the statistical drag of the price acceleration that took place in August, following the recalibration of the official exchange rate.”
Doubts regarding the official exchange rate
In the weekly analysis, the consultant Ecolatina estimated that The week’s events cast further doubts regarding the possibilities of sustaining the official exchange rate in the coming months. “In particular, pcaused a jump from 48% to 112% of contracts as of December of Dollar Futures, so he “The market is expecting a devaluation of the official dollar towards the end of the year,” expressed the institution in its latest report.
Record gap
“Keep The official wholesale exchange rate at $350 in the previous election was not harmless,” says Ecolatina.. In the first week of October, the demand for dollars increased and the average gap ended around 115%. Regarding this growing exchange rate uncertainty, parallel dollars jumped once more on Monday and Tuesdaygenerating a scenario of even greater volatility.
In the midst of the exchange crisis, Martín Guzmán reappeared and rejected a Bonex plan or a reprofile
As the consultant suggests, “it is key for the ruling party’s electoral aspirations to prevent the exchange rate gap from growing.” rise in parallel dollars has inflationary impacts y puts in check the government’s idea of arriving with a feeling of inflation “decelerating” -at ridiculously high levels- to the elections,” they indicated.
Hence, maintaining the parity at $350 was not free either: “the latest official data and own estimates reveal that The Government allocated more than USD 2.5 billion between January and September to keep financial USD under control,” analyzed from Ecolatina.
Massa responded to Milei regarding the fixed deadlines: “For one more vote people’s savings are being undermined”
This exchange rate volatility gave rise to a new regulation. The CNV limited the purchase operation of financial dollars to individuals or legal entities located abroad, who may only operate on their own account and with their own funds, reporting the operations to be carried out five business days in advance, with a limit of 100 million pesos per day.
“Although local investors who operate on their own account and with their own funds will be able to operate without limit, they must also notify five business days in advance if the amount is greater than $200 million per day. This will allow the demand for foreign currency to be “quoted” during next week with the aim of avoiding new jumps in the days before the elections,” the consultancy expressed.
The market and the devaluation it foresees in December
Precisely, “The combination of a high gap and negative net reserves conditions the ruling party’s strategy and, in particular, it sows uncertainty regarding the price of the official dollar following the general elections,” they anticipate from Ecolatina.
And he warned that the events of this week, short-term December dollar futures contracts went from 48% to 112%. “This abrupt jump grew throughout the weeka, strengthening the idea of a magnitude exchange correction at the end of the year.
Finally, the report states that “The BCRA still has ample room to increase its intervention in this market: At the end of August, the BCRA’s sold position was around USD 810 M, USD 2,290 M below its position in the middle of the same month,” he concludes.
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