Dollars from the Countryside Impact Market with Sharp Drop in Argentine Peso, Future of Exchange Rate Uncertain

2024-04-19 05:24:00

The dollars from the countryside are reaching the market and that caused the bill to start with a sharp drop at the opening and a good amount of business that lasted until noon. At that time, buyers began to appear, causing the financial dollar to end almost at the same level as the day before.

The thing is that the shadow of the stocks, after the statement of Domingo Cavallo that it must be raised in the middle of the year because the exchange rate delay is risky in the future, is ahead of the market.

In that sense, the ESEADE report made a direct statement indicating that “Javier Milei’s government has been in place for four months and the speculation about what will happen to the exchange rate is increasing. Will we have to wait until the end of the year? Some speculate that we will have to wait until 2025. The future of stocks is one of the most unknown and at the same time relevant for the future of the Argentine economy. Caputo would argue that exchange controls continue until sufficient reserves are accumulated to accommodate a possible exchange rate run.

Investors, facing the situation, were more cautious. Only the “blue” fell to $1025 (-$5). MEP rose 76 cents (+0.1%) to close at $1,021.92, while cash to settle (CCL) added $3.40 (+0.3%) to $1,021.92.

The largest liquidation of exporters was shown in the Free Exchange Market (MLC) where USD 435 million was traded, 10% more than in the previous days. The Central Bank was able to purchase USD 199 million as demand from importers increased to USD 236 million. Reserves increased by USD 247 million to USD 29,713 million.

The report from the consulting firm F2 Andrés Reschini indicated that “the financial dollars managed to maintain themselves beyond the increase in settlements that increase the supply in the CCL. “The strengthening of the dollar around the world and the weakening of the real probably had a lot to do with the maintenance of these quotes.”

Debt bonds strengthened the rally that began on Wednesday, despite the rise in the yield rate on US Treasury bonds to 4.65%, the highest level since November 11.

The Globales, who have foreign law, rose more than the Bonares with local law. Increases of 3.7% were recorded in the GD30 and GD42, while the AL30D rose 2.2% and the AL35D, 1.6%. The result of these increases was to reduce the country risk from 28 units (-2.2%) to 1,242 basis points.

Bonds in pesos began to be offered and the longest ones recorded a CER-adjusted fall of up to 4% at that time. Investment Funds were liquidating positions by exchanging long bonds for shorter bonds. But towards the end buyers seemed to cut their losses and the securities remained at prices similar to the prices of the previous day, suggesting that the initial fall was due to the dismantling of a strong position. The most popular bond was the TZXD5, which rose 1.14%. There were also buyers of fixed rate bonds.

The titles were about the evolution of the dollar (linked dollar) is encouraged by the view that the 2% monthly devaluation scheme will not resist the pressures and by the hope that the rise of the exchange rate will not be delayed. Therefore, they rose to a strong business. TV24 added 0.54% and the dual bonds that are adjusted for devaluation or inflation had their maximum performance in the one maturing in January, which increased by 4.25%.

The stock market was neutral with little business. In ADRs – certificates of stock holdings listed on the New York Stock Exchange – the most red.

For today, the good performance of sovereign bonds is expected to continue and demand for dollar-linked securities will strengthen. The Stock Market continues to wait for very cautious buyers despite the improvement in the New York markets.