Political doubts hit Argentine markets weeks before elections

Public and private securities Argentina fell on Wednesday affected by the growing uncertainty about the political and economic future of the country in the face of the next elections to president that will be held in October.

An even result in the primary elections held in August deepens short-term doubts in a recessionary stage, with strong inflation, reduced reserves in the central bank (BCRA), high fiscal spending and exchange pressures due to dollarization of portfolios.

“We are a month away from the elections but, from now to October, it will be like 10 years. In this framework, the market becomes very cautious, but with sudden movements within the low trading volume”said Nicolás Chiesa of Portfolio Personal Inversiones.

The ultraliberal Javier Milei, who led the primary elections, proposes dollarizing the economy and eliminating the BCRA, while the Minister of Economy and official candidate, Sergio Massa, supports the local currency, and the center-right leader Patricia Bullrich encourages bimonetization.

“The next few months are shaping up to be complex (…) Far from giving in, we expect inflation to remain around double digits, acting as an escape valve,” stated the consulting firm EcoGo.

This in “a macroeconomic context where the lack of reserves, the stocks scheme, the debt in pesos, the deficit and the gap put pressure on the sustainability of a framework that becomes increasingly difficult to dismantle in an orderly manner and the uncertainty of the political level “is transferred in a harmful way to the economic level,” he explained.

The S&P Merval index fell 2.54%, to 562,032 units as a provisional close due to renewed profit taking, especially in shares with good liquidity and external listing.

For their part, bonds in the over-the-counter market fell by an average of 1.2% in the midst of a selective market in favor of securities adjustable by inflation or linked to the exchange rate.

“They are all hedging movements (of assets), day by day the conditions are observed and they are operated on. For example, in bonds there is a great movement in the ‘Globals’ and in ‘Dollar linked’ due to the evident dollarization with the uncertain political scenario,” said analyst Marcelo Rojas.

In this framework, the country risk prepared by the JP Morgan bank rose sharply by 61 basis points, to 2,245 units towards the close of the local market (2000 GMT).

Given the current context of the economy and with the idea of ​​strengthening Massa’s candidacy, the Government has launched a series of measures that seek to increase the purchasing power of the population and calm social tensions with the consequent pressure on the weakened coffers of the economy. treasury.

In this regard, the Chamber of Deputies approved on Tuesday night a bill to reduce the tax on high incomes, a measure that will have a fiscal cost of 1 trillion pesos (2,857 million) in 2023.

The peso in the alternative exchange places once again operated lower at 712.80 per dollar on the stock market “cash with settlement” (CCL) already 680.20 units in the “MEP dollar”to advance slightly to 735 units in the reduced marginal band or ‘blue’.

The peso in the interbank market concluded at 350.10 units per dollar, in a market stabilized by the BCRA with purchases or sales of foreign currency from its reserves.

The monetary entity bought just US$ 1 million from the market this Wednesday, accumulating 27 consecutive business days with acquisitions, a period in which it added US$ 1,638 million.

In the external context, investors were analyzing the decision of the US Federal Reserve (FED) to keep interest rates stable, but with a tougher stance and with a projection of a new increase in yields by the end of the year.

Source: EFE