After several months of launching the third stage of the economic program, there are two elements that relate to the market. The key issue is the lack of accumulation of reservations at the Central Bank and others, is a higher interest rate, which makes the main engine expansion more expensive: lending.
Over the past week, several votes warned of the accumulation of reserves. “After an accelerated deterioration in the external sector, which depends not only on the current account, but also on capital and financial accounts and closes with the accumulation/inability of reserves, that is, where the government has an Achilles heel,” he analyzes in his weekly Eco Go monitor.
On this topic, he also expressed himself in the Barclays report. For a British bank, a march is an economic plan, but “to accumulate reservations is not mandatory.” “This is a component that determines whether we continue constructively with the scene or not,” the document said.
In June, pure international reserves have grown for the first time since the flexibility of shares thanks to the procurement of Bondo and the Treasury of 2030. However, the outer background is still fragile. “He can exchange the balance and payments of the first quarter of 2025, confirmed the deterioration of the current account, with negative records in the service sector and in the net purchase of tickets. With the inflation contained, official attention was paid to the accumulation of reserves, ”they wrote from Cohen Financial Alties.
In the PXQ report, the consultant directed by Emmanuel Alvarez Agis warns that the initial phase 3 design was provided that the Central Bank intervened only in the exchange market with the purchase of currencies when the dollar reached the lower line of the strip.
Recontrolize the economy
This mechanism will accumulate reserves and the issuance of sand for repeating the economy. However, with the exchange rate, which remains “persistently higher than this threshold”, the official strategy has lost its money anchor and the ability to strengthen the net reserves, which, according to the report – return to negative land.
The document is clear: “Until several weeks ago, the official discourse did not pay attention to the risk of risk of the dynamics of reserves and the decision could not be bought within the group. The thesis was that in the country there was a political component, given the risk of a populism that returns the KFK hand. ”
Nevertheless, the consultant of Emanuel Alvarez Agisa says that the fact that after the decision of the former president, the impact on the Argentine distribution was invalid is becoming clear to the proposed exchange scheme. ”
Exchange course and flotation stripes. Source: PXQ.
Impact on interest rates
In this context, PXQ claims that monetary reduction leads to bull -free pressure on interest rates, which makes a loan – one of the key consumed and investment engines – and prevents the restoration of the economy.
“In an illustrative way, since it could be a loan in Peso in the private sector has increased by 116% in real conditions, while the ratio of relations/loan fell from 2.4% to 1.2%, which causes growing tension in financial mediation,” the report said.
Faced with an exchange rate and the need to contain inflation, “the government has chosen a manual turn”: replace the BCRA with treasures as the main subject when buying dollars and issuing Peso.
Instead of interfering directly, BCRA supports its passive role, while the dollar moves inside the group, which limits its participation in repo agreements. Thus, monetization of the economy becomes dependent on refinancing by less than 100% in tenders of treasury debt.
That is, if the exchange rate does not go to the gender of the group, “the external financial strategy of the government is complicated by both (restriction of risk risk) and the dynamics of consumption and investment associated with the loan,” he warns.
BCRA strategy
The new strategy includes three mechanisms for the Treasury for absorb dollars: direct purchase of reservations to prevent the fall in the exchange rate, issuing a debt of local currency against reservations and the privatization of state assets with the requirements for payment of the line.
For PXQ, “in addition to the technical features, the“ later ”recognition of the government is important that the exchange rate will not go to the floor of the group, and that other tools are necessary to accumulate a reservation and monetization of the economy,” he says.
Greater exchange pressure on the horizon
During June, AGRO -EXPORT COMPLEX eliminated an average of 190 million US dollars per day -25% more than in May, without pushing the dollar to the group’s floor.
“This reflects the growing demand for currencies, especially from the wide release of tourism and the import of goods and services, which does not give, despite the positive real rates. Faced with the third quarter, when the proposal for agricultural dollars falls seasonally, the risk of increasing exchange pressure, ”warns Alvarez.
However, this contrasts with other views. For example, for investment in Delphos, June registered the largest currency income since May 2023, from $ 4231 million. The USA, due to the early elimination of soy export and low alkvolnoye with a low corn content.
From one 618, they argue that from the transition to the entered flotation regime, the government uses export flows of grains as an anchor for the content of metabolic volatility. “Nevertheless, it is expected that these flows will fall about 2 billion per month, which will increase the current account deficiency to 1.7% of GDP.” In this context from the broker, they expect that the exchange rate “will be inclined to approach the center of the exchange group.”
“It is expected that in July the other $ 4450 million associated with DJVE, presented before the end of the release.
PXQ concludes that the anti -inflationary commitment of the ruling party is maintained on a fragile balance: “We need a real real rate to keep the dollar in the dollar without all activities.”
In order to underlie this dynamics, the government may rely on corporate and provincial emissions in foreign currency, non -residential records of capital and the temporary expansion of a low resolution scheme. But if these factors do not reach, more direct intervention is not excluded.
In general, for PXQ, the treasures become the new main hero of the exchange and monetary policy, trying to keep the group scheme afloat without a complete victim of growth.
However, the balance is unreliable. The constant absence of the accumulation of reserves increases the risk of the country and makes funding more expensive, while the pressure at the rates jeopardizes the restoration of the loan. The “controlled” flotation, and not the introduction of expectations, it seems, is inflated by a helium balloon: “It looks firm, but dangerously swims next to a new storm,” he concludes.
