Sunday , April 18 2021

In a week, the dollar rose more than the fixed term in November

The dollar went to the upper float range. This trend may be accentuated this week and does not seem to displease the Central Bank that in the Friday auction of Liquidity Letters opted to lower rates from 0.26 points to 61.75% and release almost $ 50 billion, which obviously will not happen in fixed terms, but a good part will be converted into dollars.

The question is who will sell the dollars and what price will be asked because the resurrection on Friday was very strong: increased $ 1.21 to $ 37.70 wholesale and with a good amount of business. In a week, the dollar rose as much as the fixed term in a month.

In banks and exchange offices, the dollar rose on Friday, from $ 1.08 to $ 38.51.
The market, even in these values, thinks that the dollar is late. At the end of the year, there are those who put up at $ 43 and there are those who put the band at the most for $ 47.

The point is that it does not exceed the range and this is something that can be achieved without complications, which will prevent the Central Bank from having to intervene in the square. On the other hand, the market made its adjustments thinking more about the interest rate than the value of the dollar.

The employer suffers more with an active interest rate, that is, the one that charges for a loan of 5.5% a month, than a dollar that goes up by the end of the year, 16% and stabilizes at that level. This increase, to recover the delay of the exchange rate, is equivalent to two and a half months of rate. But if the dollar rises and the rate falls, the entrepreneur pays off costs and exports benefits. Besides that, the entrepreneur works with the hypothesis of a dollar for something over 40 dollars. He knows that, at $ 37, it is impossible to operate and that when he needs to renew the inputs, the dollar will be above that value. This is why it is easier to maintain the exchange stability at heights than at the floor of the float range.

We must not forget that Argentina, since the monetary limits were implemented, Again it was expensive in dollars.

O country suffers inflation due to and today the interest rate and taxes are more important in that cost. The high dollar is a consequence of these two variables, because for Argentina to be competitive, it must be at a "high recontra" level, as one minister said in the 1990s.

That is why it should not be surprising that as of this week, an escalation of the currency starts in search of the upper dollar range. Thinking about chaos is not in the hypothesis of any consultant.

In addition, the outside brings unfavorable winds. The fall of oil, plus the increase in Treasuries, the strengthening of the US dollar against other currencies and the increase of interest rates by the Federal Reserve in December pressed the currencies of the emerging countries that are condemned to retreat. depreciated against the United States currency.

And even though it may seem paradoxical, what can mitigate these unfavorable changes in the world may be what happens in Argentina, the most volatile emerging country. The mockery of fate is because of the country they can leave positive signals if the meeting between Donald Trump and his Chinese counterpart Xi Jinping occurs to mitigate the trade war which is transforming economic activity in the world. The planet will be attending this meeting.

For now, Wall Street expresses pessimism and, under these conditions, sees that its actions are overvalued. In fact, the VIX, also called the "fear index" because it measures the volatility of the US market, is close to 22 points, the yellow alert zone. After the 30 points, there is an orange alert and portfolio changes begin and the search for safe havens for money.

The other problem in Argentina is country risk. The October elections are a major hurdle for titles that expire beyond 2019 to attract buyers. Therefore, with the risk close to 700 points, Argentina is at the mercy of the IMF, who is the only lender he can count on.

The tools to come out of the crisis are very limited and depend again on a good harvest, good international prices and an advanced currency parity.

Business balances close the way for investors to the stock market. The losses are too great to think about investing in stocks.
On the other hand, there are over $ 100 billion floating in the square they are evaluating going to dollars. They do not want to have extremely heavy wallets, despite the monthly rates of 5% who pay some bonds and monthly fees of 4.5% in fixed terms. In fact, the dollar in the week rose 4.87 and took from the savers the profits they thought they had in November.
Fixed-term funds are the largest holders of these deposits and investors can withdraw them at any time because they are not subject to deadlines.

Large companies are the other support. What is certain is that the last tender of the Liquidity Charts showed that the fixed terms are not renewed in full and that ahorristas and big investors began to dollarize. Earlier in the week, they did it shyly. On the last day, the rise left no doubt about what the market thinks.

The end of the carry trade (saving in pesos and passing the profit to dollars) came to an end.

Source link