The Free Dollar Raised To $145, Shattered A Record And Sunk Valuations Of Argentine Stocks And Bonds

INFOBAE – The free dollar broke a record and Argentine stocks and bonds were dragged into large losses on Wednesday, a day after the Central Bank announced a package of measures to further restrict access to the foreign exchange market in order to protect the depressed reserves.

The free dollar was traded in a range of 142 to 145 pesos, depending on the amounts involved, above the maximum of $140 on July 24. The bill rose 14 pesos or 10.7% and the gap with the solidary, to $130.76 (Banco Nación), was reduced to 8.9 percent.

The monetary entity maintained the limit of purchase of foreign currency for hoarding, called ‘saving dollar’, at 200 dollars per month, with a tax of 30%, but now whoever does the operation will have a new surcharge of 35% as an advance of the Tax on Earnings, which took the retail dollar above 130 pesos, almost in a convergence with the alternative prices on the Stock Market and the parallel market.

Aldo Abram, director of Libertad y Progreso, told Infobae that “these measures taken by the Central Bank have just settled a discussion in which many economists argued that maintaining the stocks over time would lead to more and more restrictions, a stocks much more closed. Today we already know that the debt restructuring was successful and they had to restrict the stocks, with the extremely negative consequences it has for the Argentine economy. They are leading us to a crisis for trying to sustain an instrument that is unworkable and inconsistent and that is going to end badly, as all the traps ended in Argentina, unfortunately. ”The exchange restriction is much more serious on companies, by complicating payment of its debt with the outside (Christian Buteler)

Abram warned that “there are measures that strongly affect the credibility of Argentina. Forcing the companies, which have the money to pay their debts, to restructure them, directly what they have just done is to take away credit from Argentina. Entrepreneurs who were trustworthy in the world now stop being so. Therefore, every dollar that one supposed would come from loans granted to companies from abroad must be crossed out, because they will not enter. Who is going to guarantee the payment of that debt? Not the company, because the BCRA can say that it cannot pay its debt, but only partially. They have just reduced the amount of dollars and the financing that is going to come to Argentina. Far from improving the situation of access to the Argentine dollar they have worsened it”.

The wholesale dollar rose six cents to 75.25 pesos. In the course of 2020 it adds an increase of 25.6 percent. The gap between the wholesale official and the blue dollar reached 92.7 percent. The exchange gap between the blue dollar and the wholesale official exceeded 90% and was close to the maximum of 100% of last May

The amount traded in the spot segment totaled USD 197.1 million, somewhat lower than in the previous September rounds, above US $ 200 million a day, in a round in which the BCRA would have concluded its intervention with Buying balance of about USD 15 million, according to estimates by private agents.

Financial analyst Christian Buteler defined the ‘reloaded’ stocks as “a bad measure, a patch that does not solve the underlying problem: it is a stocks of the stocks. Not only is it bad economically and its implications for individuals, it is much more serious on companies by complicating the payment of their debt. One point in favor of debt restructuring is that companies could go out and seek financing for their maturities. Now the BCRA is not going to allow to buy more than 40% of the dollars for the maturities and it puts a lot of “noise” and many doubts to this private financing. They put companies in the situation of having to choose between faulting validating MEP values ​​or the cash with liquidation, God knows how far they can go. ”They are leading us to a crisis for holding an unviable and inconsistent instrument that is going to end badly, as all the stocks ended (Aldo Abram)

The new regulations establish more restrictions on the use of dollars for consumption abroad, purchases of foreign currency for savings and exchange operations with bonds, while also obliging companies to refinance debt capital maturities that operate between October 15 and on March 31, 2021.

“It is important to highlight the issue of the image of the Minister of Economy, who on Sunday said in an interview that the stocks were not going to be hardened, that it was not the way, that this was to endure and that the Government did not come to endure. but to reassure. And the minister’s word was broken in less than 48 hours. In terms of trust, it doesn’t help at all, “Christian Buteler told Infobae.

In banks, the retail dollar averaged $ 131.26 for sale, with the double taxation of the PAIS tax and the advance of Earnings. Argentine shares on Wall Street fell to their lowest dollar prices in four months

An important fact that explains why the blue climbed is that the supply in the parallel market was extinguished by the jump in the solidarity dollar. In the “caves” they are taking the currency at $ 137, so that the profit from the operations of the “mash” -buying official and selling in the informal one- leaves a very meager profit of $ 1,435 per USD 200, which does not merit running the risk of losing currency.

“Based on these measures taken by the AFIP, together with the BCRA and the CNV, the blue dollar is going to skyrocket. It’s going to be difficult to put a brake on it. What I notice is that uncertainty is being transmitted to the market. The only way to calm the waters is if, based on these measures, they can sit on the reserves and incorporate them through the liquidation of foreign exchange from the trade balance ”, commented Walter Morales, president of the Wise consultancy.

“Once the parallel dollars go up, they set a new floor. Because later, in the best of cases, they adjust for inflation. So it stalls for a while but maintains a gap. I think we are going to face a jump in the gap again, “added Morales. ADRs on Wall Street lost up to 9%, while the country risk rose 6% and approached 1,200 points

Spot market parities with settlement and MEP also advanced 3%, to 132.04 and 126.53 pesos, respectively.

From Portfolio Personal Inversiones they specified that “the reaction of the gap will be upwards with a free dollar that will have as a floor -in principle- the one that arises from the official plus the various surcharges that it will suffer from today. This taking into account, in addition, that the purchase of savings dollars will also be strongly reduced given the consumption of the quota for various concepts ”. They added that “it will also be necessary to see what the position of the BCRA is, and whether or not the gradual devaluation of the official will let run a little longer. Or if it begins to use the bonds in the portfolio to ‘intervene’ in sudden reactions that can be observed ”.

Uncertainty weighed on stocks and bonds

In addition to the alternative dollars to the stocks, stocks and bonds were the most explicit indicators of investors’ dislike of the BCRA’s decisions, an entity that ruled out a devaluation as an alternative. ADRs on Wall Street fell to their lowest prices since May 14, four months ago.

The S&P Merval Buenos Aires stock index fell 5.5% in pesos, to 42,167 units, affected by the financial sector, not only because it was the one with the highest market weight, but also accompanied the collapse of the sector’s ADRs in New York .