Hot topics on our new English Financial Review

*Now, concern remains about how depreciation of the peso must be stopped if it threatens with crossing the ceiling of the exchange rate band, something very likely to happen. Extending the intervention margins to $0.25 billion increases possible success for the current program; but unfortunately, does not guarantee it”

“It keeps being a better option to guarantee the ceiling with as much dollars as needed. A serious advantage would be that bets in favor for the Central Bank would rise”

“It is necessary to clarify that any new news implying lower chances of reelection for CAMBIEMOS may trigger another run and flight of capitals. The good thing is now the BCRA has achieved new tools to mitigate its impact”

“it is very important that given a new exchange run that pretends to surpass the ceiling of the exchange band, the BCRA put all the necessary reserves to remove the surplus pesos. If it fails, next run Will be on the Leliqs and deposits, which is an avalanche impossible to stop”

“Finally, if the BCRA made some sound announcement that it Will withdraw every exceeding peso any time it reaches the ceiling. Is that a guarantee for success? Unfortunately, not. However, it is clear that this is the bet with greater chances to keep credibility in the peso. If it is lost, there is no strategy good enough to avoid a new crisis, since there is no way to avoid disarming the Leliqs portfolio and a bank run. However, what is for sure is that the announced mechanism to face the run in the ceiling of the band has much less probabilities to be successful; because it proved to be useless in 2018 run and, in this occasion, the time that will be before fleeing the debt of the BCRA and the banks will be much shorter. Therefore, better cement the credibility of the monetary authority with time and forcefully”

“The Consumer Confidence Index, prepared by the “Centro de Investigación en Finanzas de la Universidad Torcuato Di-Tella” (Center or Research in Finance of Torcuato Di-Tella University)and that includes values from 0 to 100, reached in April 34.41 points in the national level, which implies a 1.1% fall compared to the result of the third month in 2019. Within the components of the CCI, the Personal Situation Sub-index fell by 1.3%, the Durable Goods and Real State Sub-index dropped by 19.6%, While the Macroeconomic Situation Subindex increased by 4.4%. In the territorial distribution, consumer confidence fell by 6.6% in the Interior of the country. However, it went up by 5.3% in the Capital City and by 0.6% in the Great Buenos Aires, always comparing to the previous month. In the distribution by income level, consumer confidence rose by 1.1% for the upper income sector and fell by 0.7% for the lower income sector, always compared to the previous month”.

“Sales at shopping centers increased by 22.55%Yoy in February at constant values, decelerating compared to the 25.02% registered in January. Sales at current prices in February revealed by the survey of shopping centers reached $5.5 billion, that is 0.1% below the total value in January. On the other side, sales at constant prices of April 2016, in February 2019, reached $2.8 billion, which represents a 17.6% decline compared to the same month the previous year. Looking at the year-on-year variation, sales in shopping centers increased by 22.5%Yoy at current prices, decelerating almost by three percentage points since the 25.0%Yoy showed in January. When making up the different items, those with large increases were: “Perfumery and Pharmacy” by 57.6%; “Cloth and Sport Accessories” by 55.0%; “bookstore and Stationary” by 33.7%; “Clothing, Foot wear and Leather Goods” by 31.1% and “Others” by 30.0%.

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Written by our director Aldo Abram and our economists Iván Cachanosky, Cristóbal Morales Vera, Natalia Motyl and Nicolás Luppi