Electoral uncertainty and fear over debt in pesos, the engines that drove the rise of the dollar

The gap between the official dollar and the cash settlement dollar has already exceeded 140%.  REUTERS/Dado Ruvic/Illustration/File
The gap between the official dollar and the cash settlement dollar has already exceeded 140%. REUTERS/Dado Ruvic/Illustration/File

The quotes of the dollar in all its variants – except the official one, set by the Central Bank at $350 until the end of October – yesterday once again reflected all the tensions accumulated in the economy and the strong uncertainty with which the market faces the final stretch towards the first electoral round.

With the closing prices surpassing all the “psychological” barriers that the Government sought to defend until last week, both in the free ticket that exceeded $850 and closed at $843, and the cash with settlement that exceeded $900 and the dollar Stock market, well above $700 with a price at the end of the wheel of $747. All this with a strong official intervention that market analysts calculated at more than $80 million a day between yesterday and today, with a cumulative total of close to USD 350 million in the last 5 wheels. The figure has an impact on the Central Bank’s reserves, after also ending the entity’s positive streak in the official exchange market, in which it has already accumulated two negative days. Just because of today’s operations it had to give up another USD 80 million.

Behind this maximum pressure, which brought real prices to levels equivalent to those recorded in July of last year after the departure of the former Minister of Economy, Martín Guzmán, that is, “panic” values ​​technically called “overshooting”, The deep concern that arouses not only the electoral process but also the conditions of the transition “whoever wins” is displayed.

This distrust that ends up being reflected in the dollar has a clear manifestation in the debt, both in dollars and in pesos. In this last case, the signs are strong: the daily levels of rescues by mutual funds in search of coverage in dollars are growing, which forces the BCRA to also intervene in the bond market in national currency, issuing pesos. and adding fuel to the rise. In the market they have already detected a monetary issue of $180,000 to operate in this segment.

“The exchange rate gap between the CCL and the official exchange rate also reached recent highs, exceeding 140%, denoting a level of financial nervousness comparable to October 2020 and July-August 2022,” highlighted analysts at Delphos Investments, which They attributed part of that rise to the flight of assets in pesos. It happens that the prospects that investors see on this front are not very encouraging, since the market is affected even with the presence of the Central Bank, something that is expected to change after the change of government.

BCRA intervention
BCRA intervention

“The possible disappearance of the BCRA as the buyer of last resort of debt in pesos starting in December, together with the high financial needs of the government at the end of the year, configures a very challenging scenario for local debt. Likewise, the market seems to assign real chances to contractual changes to alleviate the burden of local debt in the next government. Together, all these factors would keep the debt in pesos under pressure in the medium term,” the consulting firm noted.

With this background tension, the futures market is a more than clear signal of expectations regarding the official dollar, where the price in December already exceeds $700, that is, it doubles the value of the current official exchange rate. “Looking to the end of the year, more than 100% devaluation is expected, much higher than what was expected 14 days ago,” said Pablo Repetto of Aurum.

The market consensus is now that there is no element powerful enough to envision an easing of the exchange rate gap, quite the opposite. “With a more cautious external climate in the background, which is combined with a context of growing local uncertainty, domestic assets have no choice but to continue the weakness without pause, since investors prefer at this stage to lean towards defensive positions rather than waiting for the eventual clearer outlook after the elections,” said economist Gustavo Ber.

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