After the process of exchanging old sovereign debt securities for the bonds that were issued as a result of the operation, Today, the alternative exchange rates known as the dollar counted with settlement and the MEP dollar will operate fully again.. In the market there is expectation for this first business round, to know what the Government’s strategy will be after the Minister of Economy, Martín Guzmán, assured that they would use the “fire power” of the Central Bank to conduct these parallel quotes of the dollar. The monetary authority has about $ 7.5 billion in sovereign bonds You can use to keep financial dollars down, but at a very high cost and with unpredictable results in terms of trust..
Last Friday the five days of “parking” that were imposed on the new bonds arising from the exchange ended. It is not a new rule, since the Central Bank and the National Securities Commission forced a five-day wait between the purchase of bonds with pesos and their resale in exchange for dollars, the arbitration necessary to buy the dollar counted with settlement or MEP , but on the occasion of the exchange it was decided to impose that waiting period also to the new titles at the time of their issuance.
The decision generated a kind of “foreign exchange holiday” for the parallel dollars. Without enough bonds to operate with good volume in the past from dollars to pesos and from pesos to dollars, financial prices ended up with increases last week – they closed with increases of just over 4% in $ 126 the MEP dollar and $ 129 in liquidity. -, but the movements were not considered representative by the operators.
Today, Once the parking period of the new bonds has been completed, the value that arises from dividing the price in pesos of new securities such as AL30 by their price in dollars will be more representative of the price at which market participants are willing to buy and sell dollars.
But beyond the movements that the market brings to these parallel prices, the eyes of the operators are on how the Central Bank is going to act now that the financial dollars recover their power.
The Minister of Economy, Martin GuzmanHe said when presenting the results of the local debt swap that after the operation the Central gained “fire power” to intervene and stabilize the exchange rate gap. He said it in reference to the holdings of sovereign bonds that the monetary authority has, some USD 7,500 million at current market value, which the entity led by Miguel Pesce can sell in exchange for pesos to lower cash with settlement and to the MEP , hoping even to drag down the blue as well.
The exchange rate situation does not appear sustainable, according to analysts, and forces some reaction from the Government.
“The information related to the exchange intervention of the BCRA confirms that the dynamics is also very negative, with sales of dollars that continue to accelerate. Specific, Official data as of September 7 show that the BCRA sold USD 493 million in the first 5 rounds of this month and some USD 1,295 million in the last 20 rounds; figures representing 5% and 12% of net reserves, respectively”Highlighted an SBS report.
Pesce can use the bonds in his portfolio in specific interventions. By increasing the supply of securities in exchange for pesos, it can help to lower the value in local currency of those securities, which reduces the amount of pesos needed to get dollars implicit in the price of each paper. The problem is that firepower can have different readings: it can discipline the market in the short term but allow bets that the entity will eventually run out of ammunition.
In addition, there is the problem of cost and indebtedness. The new securities are trading today at a discount rate of about 12%, selling securities in the hands of a public body to private holders would be equivalent to issuing new Treasury debt, and at a very high rate.
“If you sell against pesos it is crazy because you are giving away bonds and enlarging the debt. And the other is to buy bonds with reserves with dollars and sell against pesos, it’s like selling reserves at $ 130. But you don’t have that many reserves, “she said. Mariano Marcó del Pont de Silvercloud Advisors.
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