During an unusual trading round due to a holiday in the United States, which left the local market without a pricing reference from Wall Street, alternative dollars saw a minor bounce back following a significant drop they had been experiencing in recent weeks.
This trend led to a 15 pesos increase in the blue dollar value, reaching a $ 1.110 while financial dollars went up by 2.5% for cash with liquid, closing at $ 1.140, while the MEP increased by 3.2%, $ 1.098.
Due to the President’s day holiday, the North American stock markets were closed, hence no changes occurred in the ADRs or the dollar bond prices listed in New York. On the Buenos Aires stock market, The Merval barely changed, with just a 0.5% movement.
The Central Bank continued its buying spree and in a round with US$ 252 million in the wholesale segment, it acquired US$ 93 million. It has already accumulated US$ 1,519 million in February and US$ 7,654 million since December.
The Central Bank’s ongoing purchases are reinforcing the market’s perception that the Government is experiencing a financial summer. “With the legislative roadblock cleared, “All signals from the past two weeks have been rather positive towards Creole credit,” according to PPI.
This list of positive indicators includes lower-than-expected inflation in January (with promising high-frequency data for February), a fiscal surplus in January, an accumulation of BCRA dollars, and recent rains that have improved soil moisture conditions in the core areas during a crucial period for corn and soybeans.
These factors have sparked a strong rally in bonds, with jumps of up to 25% so far in 2024.
Is this rally sustainable? “Initially, considering the intensity of the rises, we are likely to see some easing this week, at least in terms of magnitude,” PPI suggests.
They note that “the initial fiscal indicators (despite some objections due to the short-term nature of some aspects of the figure) allow us to maintain a medium to long term optimistic outlook”.
“Perhaps, public sentiment poses the greatest risk in executing these months of hard work,” they caution.
In regard to financial dollars, they mention that “one of the crucial aspects of the week will be the performance of cash with settlement, which has seen a decrease of 8.7% in February. “Especially, considering that even though inflation is on a downward trend, it remains at extremely high levels, well above double digits.” In fact, the CCL exchange rate in real terms is at one of the lowest levels in recent years.
Concerning the Merval, “The fiscal result is expected to act as a positive driver, indicating that the Government is achieving its set objectives, despite the political setback experienced a few days ago with the return to committee of the Base Law. However, the sustainability of this result achieved in the first month of the year will need to be evaluated in the coming months.”
