Tuesday , January 26 2021

By 2019, it will be difficult for the dollar

But beyond how many weeks or months this could last, what must be clear is that the current dissociation of the financial market can not exist for ever. In other words, a quiet dollar and a country risk over 300/350 points – the highest level, in which debt can be placed in international markets – are totally incompatible facts. That is, to think that the time can continue, with the dollar again changing of discreet behavior, while it is impossible not to put a new debt, but only renewing debts matures are not only incompatible but rather something more extreme factors: antagonistic one to the Other The land risk closed yesterday at a level of 724 points. So there is a sea of ​​difference between the current level and the level at which the debt can be renewed for more than six months. This factor, which shows no signs of improvement, but on the contrary, sooner than it will take the destabilization of the money market. It can not be thought that the months will continue as November, with journal titles from the financial variables with a country's risk at similar levels.

What can happen then? What happens if the current dynamics of these two variables remains unchanged: dollar and land risk? Most likely, as the first months of 2019 happen, and the currency funds are usually paid, the country's adjustment will not only have great resistance to approaching levels compatible with the possibility of going to Credit markets, but that their own high level will begin to generate instability in the exchange. And the instability with the dollar translates rapidly on the one hand to the inability to reduce interest rates gradually, even if the Central Bank has retired the "floor", and on the other hand the impossibility of reducing the inflation in a very strong way. One could say that only with great luck could support the inflation between 2% and 3% per month for many months, which is now seen for the month of December. It is worth saying that we are now in a while of tranquility that would only be circumstance and short.

And that is very reasonable, if it is considered that the government will eliminate – if the collection does not play it – the Treasury deficit operation in 2019, but it would still suffer from a large bankruptcy deficit of the BCRA, which, added to the financial The Treasury deficit, which increases, instead of falling, would meet at 7.5% of GDP. With a huge deficit and without voluntary financing in the markets, it is extremely unlikely to converge at very low interest rates and quiet and stable dollars. Even if it is considered that in the 2019 elections the markets will decrease the dollars of the body that leads to Chritine Lagarde, which will be used.

The outside is likely to not give any breath to the Argentine economy. It seems that we still do not realize that the international markets have undergone the longest and most appropriate market in the history: almost a decade of ascent and ascent of Wall Street and almost null interest rates. This scene begins to disappear in 2018, when performance began to rise and divides on Wall Street stopped rising and showing clear signs of having reached a ceiling. It is possible that the country risks taxes not only from Argentina, but also from many other countries, in their contributions, they record this factor, which is still far from being completely reduced. Perhaps in 2019 there will be several countries without access to international credit markets. And because Argentina is the most risky of all in line with the current quotes, we will go to 2019, which will have moments of great uncertainty and increasing risk. Now all this seems that the authorities that give more and more monetary rules plan plans, roofs, rules of fitness, goals and objectives, which can happen to the file all together as soon as one of the factors that we commented put pressure on the dollar market. It seems, as if it were thought, that the process of lowering interest rates remained and the possibility of keeping the dollar in control is something that was already "bought", like a domesticated fox, and not a lion, who is currently thinking of roars and baking on the tamer.

This multiplication of measures that make money more and more complex, is designed for another time and another circumstance. You could almost say that for another country. It does not even take into account that, since 2020, Argentina has to aggression from the markets to buy dollars in the financial market to pay and not fall into default in a more and more complicated world. On the contrary, monetary rules are considered worthy of an obsessive neurot, which, in an intelligible way, creates a rule after dominion while the market takes a few weeks of advantage.

Meanwhile, we are in December: the month that is usually the most confusing of the year, the month with the most effective needs in traffic and advocating current accounts in company pesos. Perhaps it does not notice, but the sources of the return to instability again develop, at the moment in a labyrinth. When it becomes visible in its entire power, it will be clear that Argentina can not afford to have a solid fiscal deficit of 7.5% of its GDP in a world that not only finances it, but also ceases to be a source of expanded financial prosperity.

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