In dialogue with Channel E, Daniel StickcoEconomic journalist, claimed that the exchange rate pax was supported by fiscal discipline, monetary order and the expectation of important reforms before the end of the year.
The government began dismantling the strong exchange rate hedge it had put in place before the election, when it offered more than $20 billion in protection against the dollar’s volatility. For SticcoThis strategy responded to an exceptional context. “The government had to deal with a situation of high dollar demand and high exchange rate uncertainty before the election“, he explained, recalling that mechanisms such as interest rate increases, reserve requirements and massive interventions in the futures market were used.
According to the analyst, the decisive factor was the agreement with the US Treasury Department. “The strongest thing was to intervene in the future market and quickly achieve a currency exchange for 20,000 million dollars“he explained. After the election results, the scenario changed. “After the election results, the situation calmed down and the government began to deactivate these preventive mechanisms” he added.
Fiscal discipline and exchange rate stability
Sticco He claimed that the continuity of the exchange rate depends on the pillars of the economic program remaining stable. “As long as the fiscal anchor is maintained and the deficit does not return, there is no reason to believe that the exchange rate will change“, he assured. In this sense, he emphasized the President’s support for the three anchors: fiscal, monetary and foreign exchange policies, along with the commitment not to provide for major unfunded spending by law.
The return to the debt market after eight years was a relevant signal. “The government was again able to issue dollar debt, although still on a limited basis“he noted, explaining that the issuance under local legislation continues to be a brake on external investors.”The next challenge will be to place debt under foreign law to extend maturities without using reserves“, he predicted with a view to the year 2026.
Bonds, IMF and reforms in Congress
Regarding the 2029 bonus, Sticco estimated demand to be in line with expectations. “There was caution, there was no euphoria, but a historical obstacle was broken” he explained, emphasizing that sovereign risk has continued to fall below 630 basis points.
As for the IMF, it believes there will be no surprises. “The government knows it has not met the reserve target, but the fund will provide a new exemption“, he explained, based on the fiscal, monetary and social results. However, he warned: “The fund will require you to become stronger at building reserves“.
He was optimistic about the reduction in withholding tax and agriculture. “We are facing an exceptional wheat harvest and there will be a good foreign exchange inflow“, he claimed, which would allow reserves to continue to slowly accumulate.
Finally, as to the political implications, he was clear: “If December ends with the adoption of the budget and labor reform, the impact will be very positive“Otherwise, he warned, the market could react with greater sovereign risk.”The government is playing a strong card, but with a certain calm“, he concluded.
About The Author
