Dollar: What is worrying is not the ticket but the rise of country risk – 11/27/2018

Seven weeks of serene exchange and dollar stuck to the "ground" of the waterline, but one day, the bill goes up a peso and all the yellow lights of the Argentine economy come on.

Part of what happened on Monday when the dollar retailer grazed the $ 40, and the wholesaler closed at $ 39.05, reaching the highest values ​​of the year, sufficient to awaken the sensitivity of the foreign exchange market.

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The race lasted a bit and on Tuesday, the wholesaler, which is the largest dollar in volume and operated by professionals, ended in a decline of 1.3% to $ 38.55.

Nobody knows it except the Minister of Economy, Nicolás Dujovne He tried to generate calm by saying:"We are very calm with the dollar, it evolves very easily".

The tranquility of Dujovne is in fact based on the fact that, from the Central Bank, Guido Sandleris, had argued that he is willing to remove all the market forces necessary to ensure a serene exchange.

It also adds to the tranquility of the Minister the progress of the International Monetary Fund which will disburse new stretch of the loan ($ 7.6 billion) relying on the mission of the agency that was in Buenos Aires approved achievement of goals government in terms of reducing the primary fiscal deficit and monetary contraction of the Central Bank.

Central reserves increased by USD 4,952 million, reaching $ 53,955 million in October, month in which the purchase of tickets was felt by individuals (they acquired 900 million US dollars), without reversing the process dollarisateur.

The flying dollars so far this year, it has reached US $ 25,959 million, a record that largely explains the exchange rate and dollar surge between April and September that led to the recession of the US dollar. last months.

But the calm had gone hand in hand with the commitment not to increase the sums of money and the high rates that the Central Bank would pay the banks for putting liquidity letters (Leliq).

The Leliq has started paying 74% a year and has fallen to 61.24% today in what is presented, according to the rebound of the dollar on Monday, as a "floor" to take into account.

The Central Bank has already announced its intention to accelerate the rate cut from January, with the target set at 60% per annum until the end of the year. 39; year. Nobody knows and everything indicates that Sandleris will act "trial and error" try to settle, very well, when it comes to reducing rates.

The government estimates that with disbursements from the IMF and US dollars wheat and maize exports, which will begin to enter in January, has tools to keep the forex market serene. But the dollar problems do not stop there.

In recent days, the country's risk rate is far from falling, it went from 600 to 700 points, stating that foreign markets continue to be highly suspicious of Argentina 's economic future.

They doubt that Argentina can pay its debt after 2020 and it is clear that the significant support that the country receives from the IMF (57.1 billion US dollars) makes the agency a preferred creditor.

This adds to the political doubts summarized in one question: What happens if Cristina Kirchner beats Mauricio Macri in the October elections?

Kirchnerism is well aware of the fear it arouses in foreign markets and it is no coincidence that, in a report published in thepoliticaonline, the former minister Axel Kicillof I talked about "defend the profitability of companies" and what "Today, a renegotiation with the IMF could be done in a position of strength".

Kicillof, highlighting Kirchner's skin change, also advanced on the magnitude of the PJ by claiming: "I suppose everyone who says Peronist is Peronist" by adding the old justicialist slogan that served Perón with José López Rega and Menem with Maria Julia Alsogaray of "The movement is wide".

The sources of uncertainty are multiplied by politics and the economy pays very dearly: Argentina's long-term bonds (bonds at 2046 and 100 years) propose annual rents of 10%, very high but does not appeal to international investors.

The financial picture shows a short-term controlled dollar at the doors of an election year that generates expectations about the political outcome and its consequences in terms of capital movements.

In the middle the game of the possible low inflation and the improvement of economic activity in the first quarter of next year.

In the meantime, and in the very near future, the government hopes that the international support it will get this weekend at the G20 summit of world leaders will give it a new air after several days of indignation and general shame for the people. acts of violence that surround us all Argentines.