On Saturday, July 2, Martín Guzmán announced in his twitter account that he resigned from office in the Ministry of Economy and took the surprise population. The announcement in his account of the recognized social network was published at the same time as Vice President Cristina Fernández was giving a speech in Ensenada.
Since the time of the announcement, Guzmán's resignation has caused turbulence in the economy. The dollars that are negotiated in exchanges with cryptocurrencies shot to values between 250 and 280 pesos, for example. After several names for the remplacing of the former minister, the government appointed Silvina Batakis.
How did the markets react in the first week of the new minister?As regards change, the Central Bank continues with a policy crawling peg Very high. The official dollar rose 1.08% and reached the value of 126,80 representing a depreciation of the weight of 74,74% in effective annual terms (TEA). The financial dollars traded in the purse, the MEP dollar and the dollar counted on liquidation, fired to $289.29 and $300.89 respectively. In the future market in Rofex, the implicit rates of devaluation fired leaving almost the entire curve at rates higher than 100% (TEA).
In terms of accumulation of reserves, the Central Bank was a net salesman last week and had a negative balance of $549 million in the last 5 wheels. The situation is very troubling, since the demand for currency for stability grows a lot and the supply of agri dollars has already occurred in May and June, mainly. In addition, the high exchange rate difference between the financial dollars and the officer generates disincentives to liquidation and demand incentives, especially in the advance of imports.
The government announces that it will not devalue the official dollar. However, the scarce accumulation of international reserves, the rate of Rofex and the significant high exchange rate gap reflect the null credibility of the government and the high expectations of correcting the exchange rate.
The Bonares and the Globales were much offered in the fixed income market by firing their rates at 47% levels for the AL30 bonus and 43% for the GD30 (the same bonus but under foreign legislation in New York). If we analyze longer-term obligations, we can see that GD35 and GD41 closed with rates of 27% and 23% respectively. These rates reflect the low expectations the market has on improving the tax situation in Argentina and the prospects that the country will not be able to return to international credit markets at least in the medium term.
The weight curve was demanded last week, mainly the Boncer and to a lesser extent the Lecer, but it should be noted that this curve is greatly intervened by the government since the government. crash of the last June 8 curve, after the obligations suffered significant losses that put the Treasury in a very endible situation because it is the instruments it uses to finance itself in the market.
These obligations were highly sought in February and March due to the acceleration of inflation of these months. In May, the market began to see that the Treasury offered long-lasting public bonds when demanded shorter assets. In that month, the curve began to suffer a decompression of rates, especially in the longer bonds such as TX24, T2X4 and TX26. In June, the Cer curve suffered a significant correction of rates that began by longer obligations and then continued by shorter obligations, including leceres. The curve went from being slightly negative to positive in almost all its stretch and left to the closure of Friday, July 8, only the bonus T2X2 and the July Lecer with negative yields. The rest of the curve remains positive.
That is why the government, through the Central Bank and public bodies such as the ANSES, began to intervene strongly in the curve by purchasing these obligations so that the debt settings of future months are not diffused. The Treasury managed to obtain the funding it needed in June, but much of the placement took it public bodies and the longer term of placement is December of this year.
The emission generated by the Central Bank to maintain the weight curve in the last month and the leliq prorate generated a very high pressure in the financial exchange rates, as we have previously mentioned, and caused a liquidity such that many banks have ceased to offer fixed deadlines generating a collapse in the deposit rates. The liquidity funds denominated money market they had to migrate their liquidity to the impossibility of renewing the fixed deadlines, generating this fall of the bond.
As expected, the markets reacted very negatively to the appointment of Batakis. The government's decision seems to go against what the conjuncture needs. Given the monetary and financing difficulties the government has since June, a minister of the centre-left economy does not seem to be what requires the current context. The challenges are numerous and the government only seems to find adhesive measures such as careful prices and hardening of the exchange rate strain, but it still does not announce any stabilization plan necessary to correct the macroeconomic imbalances of the country.
Sources: Bloomberg - Bonistas. with
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