Key day for the dollar: the central bank must prove that it can contain it

The future of Wall Street and the opening of the bags of East do not announce a good wheel for Monday. However, markets in Europe have shown increases in majorities. But the bags of this continent do not weigh as much in the world as the others.

On another occasion, this detail would have been closely watched by investors in Argentina's financial badets. But the country is waging another fight that masks the influence of the outside world. Price controls have triggered country risk at levels not seen since 2014 and an outflow of Argentine debt obligations with heavy consequences.

Federico Sidi, from Compbad Group, pointed out that "in recent days, purchases of funds that invest in bonds and the United States, excluding those of Brazil, have accelerated."

That Brazil is not in the line of fire does not come as a surprise. It's a country that is complicated because it does not close its reforms and presents some risks. Sidi explained that the portfolio was made up of 25% US Treasury bonds and the rest of Latin America bonds, including Mercosur, among which stand out those of Uruguay and Chile. "The rent is a little over two percent, but the Argentine investor is not interested in profit but in security. These bonuses are billed in the countries of origin so that the surprises that occur in Argentina before and after the presidential elections do not worry them. The investor collects these bonds in their home country and can deposit the funds abroad, "he said.

Of course, stocks of fixed-term funds, Argentine fixed income (debt obligations) and variable income (equities) decrease. Argentines have accelerated the dollarization of portfolios. There is a local "fly to quality", as the move is called where the investor favors security over profits.

Country risk in 854 basis points -It rose 6.62% in the last two wheels last week- will now influence the dollar. This is no longer information that has traveled a separate way.

The new rules of the game Care Price that consensus in consumer surveys are flammable for the dollar, because the investor there reads the failure of the fight against inflation and a weight that weakens it. Therefore, even if you see a country with higher rates, he knows that they are harmless because they influence a currency that nobody wants and that is why he has acquired a speed of circulation such that the monetary restriction is canceled. All get rid of the pesos as soon as possible and turn to the dollar.

This new world will be seen today with all its toughness and the Central Bank must prove that it has an arsenal to meet, in addition to interventions on the future market and send Banco Nación to sell dollars in the last half hour of the market.

Exporters will remain the arbitrator. If they maintain their offer at about $ 100 million a day, which adds to the 60 million calls that the Treasury offers every day, they could contain a new scald. But Exporters may expect better prices and hold liquidations because they know they are the ones who are marking the value of the currency. On the other hand, they will exchange dollars for a devalued peso every day. The inflation horizon, they calculate, which will extend until May or June and that this price control with anticipated remarks aims to advance the expected inflation which will detonate in April so as not to impact the following months.

Monday's test will be essential for the central bank and the government, looking for strength, shows the weaknesses. The price agreement was more like invoking a miracle than a rational measure aimed at reducing inflation. And the freezing of the waterline, a request for prior badistance because they see a dollar come with strength that must be contained as quickly as possible and, for that, they need the 150 USD million per day authorized by the IMF. Just spend the $ 51, they know they can step in.
The letters are molded. "Let's play gentlemen", seems to say the central bank. 10 o'clock in the morning will be the agreed time.