Volatile country: the market is now expecting a decline in the dollar

A few days ago, a senior official said that he was not worried about the change in the dollar. The day of today has denied. The Ministry of Finance and the BCRA have launched a battery of measures to align the price that reveals the Argentines and whose evolution will be decisive for the conduct of the elections. Of course, neither the Treasury nor the BCRA have said so, but the tandem movement and the context of the exchanges in recent weeks help to explain the obvious.

Thus, the market has returned and has become "bullish" with the peso and we expect the calm of the exchange rate of the last days to extend over time and, even, that the dollar drop.

The announcement of Nicolás Dujovne This was expected, but fine details were lacking. After meeting with "Mrs. Lagarde" (as they call it in their environment), announced the bazooka: he will sell 9 600 million US dollars, via auction, to the MULC. Of course, he said: "This is not an exchange policy." The auction will begin in April, one month ahead of schedule. They will be almost parallel to the multi-billion dollar soybean agro-dollars that need a "trigger" to liquidate and this is usually the exchange rate. If the producer sees a dollar up, silobolsa. If you fall, close the contract and call the truck.

The auctions come to solve the big problem of the current market: the illiquidity and the lack of private supply. "The wheat is finished and there are three or four weeks left for soy," they explained today. L & # 39; economist.

The data Argentine soybean production is expected to reach 54 million tonnes, higher than the previous estimate of 52 million tonnes, the Rosario Stock Exchange (BCR) announced yesterday.

In the afternoon, it was Guido Sandleris who released the guns. Like Dujovne, he also put forward another idea: they must deflate the economy after the sad data of February. Economists have interpreted something else. "He did not have to say 'whoever bet the dollar loses,' joked an economist.

• First, the Copom extends the 0% growth from the monetary base target until December 2019, the month in which the corresponding seasonal increase is integrated.

• Secondly, he decided that the overt goal recorded by the BM in February was also going to the end of the year. As a result, the base's average monthly target is set at $ 1,343 billion for the remainder of the year (net of the increase due to foreign currency purchases and the December seasonal increase).

• Thirdly, he reiterated his caution regarding the monetary expansion resulting from possible foreign exchange interventions to be made in April, should the exchange rate be outside the non-intervention zone. If the exchange rate is lower than the non-intervention zone, the base monetary objective will increase with dollar purchases made through BCRA submissions. These offers will amount to $ 50 million per day and a cumulative maximum of 2% of the new target set for April. At the same time, if the exchange rate is located above the no-intervention zone, the base monetary target will be reduced with the sales of dollars made through the BCRA offers. To maximize the impact on liquidity, these offers will reach $ 150 million per day, the maximum expected in the monetary plan.

Today, the dollar has dropped 43 cents, closed at $ 40.77 and could continue to plummet

As if that were not enough, he announced that the executive would send to Congress a bill to reform the BCRA's Organic Charter in order to make price stability its primary objective and to prohibit the entity to finance the Treasury. "Although they are currently being applied, these measures are strengthening our monetary system and our institutional framework," said Sandleris, who said: "We are moving towards sustainable disinflation."

"The main thing is that we will have a more demanding monetary base monetary policy for the rest of 2019 and that the base will eventually increase by 10 percentage points less than it would increase," said Walter Ramírez of Supervielle. in a note addressed to customers. . "This will result in a real interest rate that will be higher and, to the extent that it does not offset a faster fall in inflation, it will also result in a nominal interest rate. slightly higher for the rest of 2019. "He added.

"Everything seems to indicate that, on the part of the BCRA and the Treasury, the objective of anchoring currency expectations prevails, in a year of great uncertainty." Even assuming the future risk of a further appreciation of the exchange rate, "they said in Analytica. They expect the interest rate to rise, which is necessary since "until the recent rise, the Badlar had a real return close to 0%".

In dialogue with L & # 39; economistGabriel Caamaño Gómez said: "This is tightening the monetary trajectory of the second half, which should contain expectations of inflation and, at the same time, devaluation.It is a positive announcement.In addition to the recognition that sustainable disinflation requires stabilization, it must first and foremost be consistent. "Unlike his colleagues, he said:" This should help to decompress current rates, even if they would fall more slowly in the second half of the year. "