Pragmatism prevailed: Louis “Toto” Caputo It decided to absorb practically all the pesos that the banks offered it in the last treasury tender, despite the fact that the Argentines, according to the official letter, are demanding the money as soon as the crisis ends. The legislative elections dispelled the “coca danger.”
This way he made it clear that no matter what Forecasting a credit boomThe Minister of Economy does not believe that pumping pesos into the market is completely safe. Moreover, the Treasury – whose BCRA account is at its lowest levels for the year – is not in a position to take on the financial risks.
The debt maturity was huge: $14.5 billion, the Treasury Department ended up renewing 96.5% of it. In other words, Barely leaving $500 million “loose” in the market, This is a small number if we take into account that in the previous tender, a month ago, liquidity increased by $4.5 billion.
In fact, last month was not a surprise, because the financial system He called for a reversal of extremely contractionary monetary policy Which was applied at the end of the electoral campaign.
As for Wednesday’s expiration, it was not surprising for analysts either, given that signals have been sent in recent days to banks that they should channel their liquidity into new debt instruments.
The central bank presented it last week Another reduction in so-called “concurrent rates” -Interests paid to banks in exchange for excess liquidity-, thus generating a contagion that led to a decline in “guarantee” – which is used to obtain very short-term liquidity -. This rate, which has now reached 18%, It reached an extraordinary level of 190%. In the period preceding the legislative elections.
Moreover, he reversed his position by taking a measure that displeased banks: increasing minimum reserve requirements, while committing to do the counting daily rather than as a monthly average. Now, this organization has become more flexible, which is liberating 3.5 liquidity pointsMoreover It requires only 75% of reserves on a daily basis. The result of all this is that there is more room for maneuver for banks to use their available liquidity, which in principle may lead to enhanced credit expansion.
At the same time this margin was granted to the banks, it offered Extensive ‘list’Which included fixed income bonds with relatively long maturities – from February to October – and bonds Adjustable by CER, New bonds linked to average Tamar prices and also “Dollar-linked” options.
They are lowering the prices and extending the duration
As usual, the government presented the tender results as follows: A sign of confidence on the part of the market. First of all, it is explained by the fact that tendering for adjustable-rate bonds was abandoned, and that the majority was concentrated in fixed income bonds. As a positive expectation regarding the stability of the dollar and continued decline in inflation.
But in addition, the decline in interest rates was also a cause for celebration, with the interest rate on fixed income bonds reaching around 2.5% per month, in line with the reduction the market has seen in recent days.
This is no small matter, given what happened before the electionse has reached the level of 6% for the shortest positions, Which means a strong expectation of devaluation in the post-election moment.
Another fact that the government celebrates is Extended payment terms For new bonds – “duration” in financial terms -, Note that 64% of the money invested by banks matures after February of next year. In contrast, recent tenders showed a focus on securities with only one month until maturity.
Rolleo for credit
¿Caputo did a good job In absorbing almost the entire maturity? Should we have allowed further expansion of credit to the private sector, which barely represents 12% of GDP? Or, conversely, should he have tried to get more pesos, even at the expense of adopting a higher interest rate?
This is what is being discussed in the financial market, where the “short blanket” effect is seen between the needs of the Treasury and the needs of the financial system.
Those who support Caputo assert that the peso, which remains “free” at each bid, precisely represents the market’s demand for liquidity. However, it is a moot point: after all, December is coming, a seasonal time when pesos are needed most, given the “bonus effect” and maturities of corporate liabilities.
According to this situation, the “roller” would have been less helpful Lubricate the drive chain Stimulating further rapid declines in interest rates.
king Federico ForiasiThe monetary plan theorist and director of the BCRA, explained in the official broadcast program “Las Tres Anclas” that Organizational flexibility measures The move last week means banks can access it Additional liquidity of more than $3 billion.
“Once the political risks dissipated, as interest rates and country risks collapsed, the central bank normalization process began. Reserve requirements began to fall. This frees up money for banks to put into the real economy and credit is reactivated.Furiasi said.
In other words, the official interpretation is that there is now room for increased demand for the peso without implying exchange rate risks or greater inflationary pressures.
So why did Kabuto absorb all the weights? One possible explanation is that, in fact, There is still no certainty absolute about Exchange stability.
Another argument may be that the minister’s goal, at a time of seasonal increase in demand for liquidity, is to force the private sector to sell dollars, after the high demand for foreign currency recorded in the months preceding the elections.
Is the Treasury running out of pesos?
But there is also another issue. the Treasury account At BCRA, where you deposit your pesosIt has only $4.5 billionwhen three months ago it was three times this number. This contradicts the assessment of its liabilities, which implies maturities worth $100 billion in the coming months.
In addition, it must continue to purchase dollars to pay off foreign maturities. In fact, last week US$200 million was obtained to pay off multilateral credit organizations. In December, it will need another $250 million.
Caputo has other options if he wants to leave more liquidity available to the market, because in the financial system – and more specifically, in public banking, there is about $14 trillion resulting from financial surplus. If necessary, you can use these resources to purchase foreign currencies. However, analysts believe that it will not be an optimal solution, because it will limit the scope of work of public banks, which want to stimulate activity in the mortgage sector.
Those who rebuke Caputo for not asking for more pesos in the bid assert that he may reach the point where there is only one alternative left. Reserves accumulate Whether BCRA buys back. and The other side of this purchase is the issuance of pesosWhich is exactly what the government said it would not do.