he Official dollar It runs on Wednesday, November 19 at $1,425 at the Banco Nación board. In the wholesale sector, the coin is trading at $1,415. As for the fiscal dollar, cash with settlement is selling for $1,471 (+0.1%), and MEP is $1,440 (+0.2%). Finally, in the informal sector, blue is trading at $1,430.
Talk about what will happen to the dollar has returned to the heart of the Argentine financial scene. After several months in which the official exchange rate moved within the ranges without major shocks and the fiscal dollar showed some stability, signs of an adjustment in the market mood began to appear: Treasury purchases of foreign currencies, The gaps are widening againand The central bank is very cautious When accumulating reserves.
In this scenario, the debate is no longer just about determining whether the dollar is expensive or cheap, but about understanding The logic by which the government decides when to intervene Under what conditions do you prefer to let the market find its own equilibrium? Exchange rate policy, the way reserves are being rebuilt and the impact of regulations on retail operations are today the variables focusing the attention of analysts, companies and major investors.
At the international level, circumstances also add complexity. Argentine companies benefit from external financing windowswhich generates large movements between internal and external dollars that are converted to spot rates with settlement, the MEP and the spot exchange rate. These flows, driven by corporate issuances at relatively attractive rates, have direct impacts on the local market. In this framework, the direction of the dollar is determined by the interaction of multiple factors: The speed of reserve rebuilding, the role of the treasury, the wisdom of the central bank, the behavior of exchange gaps, and the regulation of retail traders.
New formal logic for pooling reserves
For Max Capital, one of the pillars of the current government’s strategy is its decision to do so Reserves accumulate only when the demand for money increases Capital flows are generated that can absorb the associated emissions. The broker’s specialists explained that the authorities are not willing to rebuild reserves more aggressively if it means pumping pesos that the market does not demand.
In this sense they indicated that this position is Very rigidBecause it shifts the discussion towards an incorrect dichotomy: it is not about choosing between accumulating reserves through the current account or through the financial account, but rather about assessing whether the inflationary costs ultimately exceed the benefits of rebuilding the fragile external position. They stressed that, according to the International Monetary Fund’s methodology, Net reserves remain negativeWhich reinforces the need to work with greater intensity.
Analysts also pointed out that the central bank More reserves could theoretically be rebuiltBut he doesn’t seem to want to do that. They explained this by saying that this caution does not respond to technical restrictions as much as it responds to a political decision that practically reduces the margin available to confront the turmoil and is conditional on stabilizing expectations regarding the dollar.
For Max Capital, the result of this approach is clear: The process of rebuilding the central bank’s balance sheet will be slowThe market will have to live with weak net reserves for a long time. This implies that any financial shock will find the economy with less ‘cushion’, an aspect that investors already incorporate into their exchange rate expectations.
Treasury purchases and crossed signals
They noted from the brokerage firm Portfolio Personal Inversiones (PPI) that the National Treasury has once again become a net buyer of the dollar in recent days. Analysts discovered that Foreign currency deposits increased by about $20 millionWhile a similar decline was recorded in the volume of its peso deposits, indicating foreign currency purchases.
For its experts, the key is specificity If these purchases are made in the exchange market Or directly to the central bank. They explained that when the Treasury Department buys MLC coins, these coins are counted in net reserves; On the other hand, when these operations are carried out in front of the Central Bank – as happened recently Reserves do not increase. For this reason they emphasized that we will have to wait for updated official data to confirm the mechanism that was used.
Producer price index specialists confirmed that the market has already taken into account these signals and incorporated them into its reading of exchange rate policy. The fact that the Treasury is returning to the market as a buyer, even if only in a moderate way, raises questions about how this move is expressed in the wisdom of the central bank.
For its part, Max Capital warned against this Relying on notoriously delayed Treasury flows does not provide predictability. Its analysts believe that the central bank must develop a clear plan for accumulating reserves and transfer interventions directly, to regulate expectations and reduce uncertainty about the path of the dollar.
Gaps, cable dollars and the impact of corporate finance
PPI explained that the recent widening of the gaps cannot be understood without looking at what is happening with the external financing of Argentine companies. With corporate bond issues in scope 7.5% to 8.5%many companies are demanding dollar cable To participate in these operations.
According to their analysis, this influx forces dollars from the local market to convert into dollars abroad, which… Pays cash even with settlementwidens the spread with the MEP and increases the spread with the spot exchange rate. Its analysts stressed that this dynamic illustrates how corporate decisions linked to global finance can resonate in the domestic exchange system even without disruptive domestic macroeconomic events.
Max Capital warned that this pressure is coupled with… Extreme caution from the central bankWhich interferes little with the accumulation of reserves. In their analysis, the absence of more decisive purchases reduces the bank’s ability to offset movements generated by these issues abroad, increasing the sensitivity of the fiscal dollar to changes in the supply and demand of foreign currencies.
The Producer Price Index stated that the development of gaps will be a decisive indicator in the coming weeks. They stressed that It just doesn’t matter if it’s closed or openBut the point where they meet. If the convergence is close to the monetary settlement, the official exchange rate will be closer to the ceiling of the range and the margin for purchasing reserves will decrease without tension.
Retailers, regulations and new exchange board
As for the producer price index, Individual investors can play a crucial role If the 90-day mutual restriction imposed at the end of September is rolled back. The brokerage firm emphasized that, historically, small investors acted as natural arbitrageurs and helped correct distortions between price quotes. Returning them to this role would be one of the most direct ways to contain the gap.
In this regard, they highlighted that without the full presence of retailers, the market is dominated by institutional and corporate actors, whose flows respond to financing decisions or regulatory changes that do not necessarily contribute to the balance between different exchange rates. That is why they consider that reviewing this regulation could improve market dynamics.
Max Capital added that the impact of any regulatory changes should be analyzed in light of the reserve accumulation strategy. Its analysts pointed out that If the gap converges at high levelsThe margin of intervention by purchasing currencies within the exchange ranges has decreased significantly. This directly conditions the ability to strengthen the central bank’s balance sheet.
The two brokerage firms agreed that the future of the dollar will depend largely on the level at which the gap will eventually close. A narrower gap closer to the official exchange rate would make room for this A more organized pathwhile convergence towards the CCL value will pressure the ability to intervene. A large part of the dollar’s journey will play in this balance during the coming weeks and months.
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