“I have dollars” is now the Government’s metamessage

September 19, 2018 - By Joseph Taylor

First was the approval of the 2019 Budget in the Chamber of Deputies. Then, the imminent disbursements of the International Monetary Fund. Thus, the Government is confident in initiating a new stage that will not be lacking in discomfort.

Speaking in numbers, and waiting for the Senate to become law the Budget before mid-November, the unwritten message but aware of the Casa Rosada is that it has more IMF dollars and that it clears in the short term one of the problems that hit him hard since April: the exchange instability.

With an outlay of US $ 5,700 million in the short term and another US $ 7,700 million before the end of the year, the organism’s silver opens the margin to aspire to the stabilization of the dollar that, where Argentina comes from, is not little.

The wholesale dollar at $ 36.65 on Friday showed the possibility of waiting a few days of calm, although the external factors (elections in Brazil with Jair Bolsonaro and virtual president, Donald Trump disputing with the Federal Reserve the future of the interest rate in EE US, the spread of balance sheets of companies on Wall Street, etc.) always threaten the precarious domestic stabilization.

In the Central Bank they show relief and reaffirm the policy of zero growth until June of the monetary base (current and demand deposits) and the validity of very high interest rates in the attempt to prolong the greater tranquility of the dollar.

They celebrate that today the branches of the banks (the most retail market) now buy the dollars that were previously sold and the fact that the market is renewing most of the maturities of the Treasury Bills in a demonstration that the rates high are absorbing weights that until recently were used to buy dollars.

Assuming that the primary objective of stabilization is enforced, there are two “disappointments” that appear insurmountable: the bad data referring to inflation and the level of activity and the country risk rate, which remains above the 600 points.

The studies that closely follow the evolution of prices continue to show concern about inflation this month, which would be closer to six than to five percent.

And that data is leaking in a context of low economic activity with important figures in terms of the fall in consumption. According to business advisors, we would expect negative data until February, when the income of export currencies begins to change the face of the Humid Pampa.

The other important fact sheet, and one that clearly shows in Neuquén’s investments and consumption, is the increase in gas and oil production at Vaca Muerta.

Meanwhile, the other objective that the government has reached is the lowering of the country risk rate, which on Friday oscillated at 660 points. That rate (indicates how much more Argentina should pay on US bonds) is read today as an additional cost of the political risk that the government faces in the face of next year’s elections. The operators ask themselves: will Cristina Kirchner return in 2019 with her anti-market and corporate policy? No answer is categorical and that the markets charge, despite the efforts that the Government plans to do.

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