The previous “overdollarization”
First of all, the previous overdollarization: With greater chances of a new default with the IMF and the imminent risk of a financial crisis, companies and investors accelerated the well-known dollarization process in recent months, which is currently taking place in reverse.
Versions that the government would give an exit with bonds to offshore funds
In the second case, it is found the version that the Government would give out bonds in dollars to offshore funds “trapped” with debt in pesos.
Ten days ago, analyst Pablo Wende wrote in Infobae that US$4 billion of debt would be issued in dollars in favor of Templeton and Pimco to avoid an exchange rate jump.
This would have emboldened the market to carry out carry trade.
The inflationary acceleration
The third point is inflationary acceleration. Private surveys showed that February inflation would be around 4.5%, while the BCRA’s REM forecasts 3.9%.
Meanwhile, the increase in the price of food at a global level might be a new fuel for a higher cost of living.
Such price perspectives are being exploited through CER-indexed instruments that, given the currency cut, exhibited 2-digit dollar returns in 2022.
The rate hike
also plays the BCRA rate hikeWhile still lagging behind inflation (and thus not seductive in real terms), nominal rates are becoming more attractive in dollars.
The carry trade In hard currency, traditional alternatives such as fixed terms gained strength both due to the appreciation of the peso and better remuneration in local currency.
The collapse of the US currency in Brazil
Finally, the collapse of the dollar in Brazil has an impact, since the real appreciated 12% once morest the dollar in the last 2 months due to better fiscal prospects and the fact that the Central Bank raised the SELIC to 10.75% to combat inflation.
This situation contributed to not deepening the backwardness of the real exchange rate in our country and to moderating devaluation expectations.
However, GMA Capital warns that “in the coming months, the explanatory factors that we list might disappear or reverse, giving rise to a new rise in the exchange rate, especially if Argentina fails to lower inflation or moderate the fiscal deficit as scheduled with the IMF”.
