Tuesday , May 11 2021

Financial week: optimism has returned to markets, but the real economy is still hit

Surely in response to the punishment that the Argentine values ​​received 2018, when two basic variables escaped from the government, such as the exchange rate and inflation, Now there is an optimistic mood among financial agents.

In the city of Buenos Aires, we are talking about re-entering the funds from abroad which exploit the excessively low prices of sovereign stocks and bonds, which are also surrounded by a weakening dollar -In higher income than liquidation of exports and a Weight gain for however exorbitant rates approved by the Central Bank, more than 20 percentage points above of the expected inflation.

On The US currency remains offered, on the foreign exchange market that shows a large volume of business for this time, between 700 and 800 million dollars a day, at a time when exports are at the center of attention of wheat, a culture that was not affected by the drought.

A $ 38.19 for merchandising and $ 37.03 wholesaler, BCRA takes advantage of the fact that the currency runs through under "non-intervention" floor to add reserves, now in historical record close to 66,500 million US dollars. They were purchases of $ 200 million last week and $ 390 million in January, continued that did not happen again in June 2017.

With an important amount negotiates in the wholesale market, around $ 800 million a day, the dollar falls to 1.8% since the beginning of 2019 and remains 2% below the floor of the "non-intervention" zone founded by Central, which increases with a rate of 2% per month. This Monday, 28. Free floating limit for the dollar will be $ 37,787, some 76 cents above the present value.

On the other side of the BCRA's currency purchase is the question of pesos. Although this is registered within the scope of the monetary expansion "zero" proposed by the president of the entity, Guido Sandleris, the reality is that extraordinary interest rates in pesos are not loosened: In 56.598% per annum after 16 consecutive reductions, while the shares of liquidity accounts (LELIQ), the exclusive instrument for banks that marks the path of monetary policy, already exceeds 800,000 million pesos.

It's about the stock January wide gains, after 2018 in which Argentina reserves they lost half of the dollar's value, while they nominated him in pesos in one year in which inflation "eats" 47.6 percent.

Although Sunday blamed the marginal gain, the leading panel S & P Merval from ByMA (Kesi and Argentinian markets) remains at close to 35,000 points, a nominal historical record, while in dollars shows an exceptional recovery: today in 940 points, accumulates an increase of 32% in foreign currencies last month, if 712 points from the internal floor of 26 December 2018 are taken as a starting point.

This jump in prices in dollars is also evident in ADR movement, the certificates through which the shares of Argentine companies on the stock exchanges in New York are traded.

After the fall of 2018, with exaggerated losses in some cases, it is no wonder the recovery of prices after the "bargain" price in January. It's just the beginning of 2019 that will be marked with instability which they will print electoral calendar.

On public debt securities accompany general improvement the market with a calm dollar, high rates and rally stocks. It is a reference, because today the Argentine state is far from being able to place titles on the international capital market due to Risk of high ground, and there protection of the Monetary Fund International (IMF) by 2020.

Having given up to 15% in dollars in the secondary market, public securities they compressed it soundly is spreading. Now yield between 10 and 11 per cent for the most expansive shows abroad.

On Argentine risk in the country strengthened the treadmill, although it is still among the highest in the developing world. This indicator JP Morgan measures the rate of differentiation of US government bonds with other sovereign issues, as well as for Argentina about 660 basis points, after the end of 2018 over 800 integers.

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