By Jorge Otaola
BUENOS AIRES, Oct 9 (Reuters) – The Argentine central bank (BCRA) sought to gain the upper hand by easing regulations for companies indebted in dollars and narrowing the difference between two of its reference rates, with the idea of reassuring the market that each day adds speculative hedging operations against one peso in the informal band that this Friday sank to 167 per dollar.
The entity reduced the interest rate on ‘Leliq’ bills from 38% to 37% on Thursday, while it raised the interest rate on passive repos by three points to 27% from 24%, so that these yields are directed towards a unification as a reference.
Regarding companies, with monthly debt maturities of more than 1 million dollars, the monetary authority introduced the required flexibilities to contribute to the fulfillment of these plans, when the exchange rate gap easily exceeds 100%.
This is “very good news, which seems to come just at a time of renewed global risk-on moment for high-risk assets,” said consulting firm Delphos Investment, adding that the rate modification “seems an attempt. to concentrate the management of monetary policy with passes and give space to the Treasury with the issuance of bills “.
Likewise, the entity modified the applicable percentages to establish the minimum rates offered for fixed-term placements, maintaining a yield of 33.06% for deposits of individuals for less than 1.0 million pesos and 30.02% for the rest of the placements.
Analysts agree that signs of a more consistent fiscal and monetary path are needed to anchor inflationary and devaluation expectations, in a recessionary economy, with a COVID-19 raging and an IMF mission visiting the country to initiate a dialogue to refinance a debt of 44,000 million dollars.
Last week, the Government launched a package of measures to increase the inflow of foreign currency and reinforce the BCRA’s reserves, mainly with the temporary reduction of withholdings on soybeans and derivatives that could encourage exports, although the expected results are not met accordingly to the consensus of analysts.
* The wholesale peso fell slightly 0.03% to 77.14 / 77.15 per dollar, after a slightly bullish opening such as had not occurred in several months. The BCRA maintained its conduct of control over the market, although the prevailing mistrust made it sell at least some 60 million dollars of its reserves during the week to maintain the exchange rate.
* The BCRA abandoned a uniform daily devaluation scheme eight days ago to adjust the value of the peso to the rate of depreciation required by the situation.
* On the other hand, the peso in the informal band depreciated a sustained 5.39% to a historical low of 163/167 per dollar, which raised the gap with the interbank market to 116.46% and remained in the week with a collapse of 10.18%.
* “The uncertainty that exists at the macroeconomic level for the medium and long term continue to be factors that are weighing heavily in investor analysis. Furthermore, with elections in the United States in less than a month, investors also choose to be invested in safeguard assets, “said Joaquín Candia, an analyst at Rava Bursátil.
* In the other exchange alternatives, the so-called ‘Cash with Settlement’ (CCL) of the stock market was at 156.2 pesos and in the Electronic Open Market (MAE), the so-called ‘MEP dollar’, was traded at 143, 3 units.
* OTC bonds operated with selectivity and an average improvement of 0.7%, thus cutting the loss for the week to 1.5%. The referential title ‘Bonar 30’ fell a lateral 0.2%.
* The JP.Morgan bank’s country risk fell 24 units, to 1,342 basis points, around 1700 local time (2000 GMT).
* “The market expects clearer catalysts. A positive catalyst could be an agreement with the IMF, but I don’t see it in the very short term,” said Sabrina Corujo, an analyst at the Portfolio Personal Inversiones (PPI) brokerage.
* The Buenos Aires S&P Merval stock market indicator advanced a quiet 0.82%, to 45,856.11 as a provisional close, with intraday ups and downs to accumulate a rise of 11.14% in seven continuous sessions.
* Traders agreed that the shares are driven by the trend of ‘Cash with Settlement’, although the market lacks strength through the most important papers. It would appear that the latest measures adopted by the Government, which were not welcomed by the market, are already incorporated into stock prices.
* Argentine markets will resume their activities on Tuesday, after the national holiday on Monday
(Report by Jorge Otaola, Additional report by Hernán Nessi ,; Edited by Walter Bianchi)