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The market warns about the loss of exchange competitiveness and puts a ceiling on the gap

On December 13, Economy Minister Luis Caputo chose the path of overshooting and applied a significant devaluation that took the official dollar from $360 to $800. What at the time generated an increase in the exchange rate above its equilibrium point is increasingly losing competitiveness. “The real equilibrium exchange rate is at an approximate value of between $550 and $600, and this is stated by the IMF, so they should begin to allow it to run at a rate a little higher than 2%,” explains Pablo Repetto. , Head of Research at Aurum Valores.

The objective agreed with the institution led by Kristalina Georgieva is a “significant accumulation” of reserves until the end of 2024 (US$10 billion) and create the conditions to return to the adequacy of reserves in the medium term. However, for Andrés Reschini, head of F2 Soluciones Financieras, the current situation is far from being in line with what was agreed. The specialist is not sure if he talks about “delay”, but the Multilateral Real Exchange Rate Index (TCRM) lost 52%. I don’t know if he would talk about “delay” but he does say that he lost 52% of what he gained in ” exchange competitiveness”. “The index calculated by the BCRA is located at 116.25 as of last Friday, while the average since 2000 until now is 120”, he contextualizes.

Will there be a new exchange rate jump?

Regarding when a jump in the exchange rate could be repeated, Reschini maintains that it is not advisable to enter the harvest with an exchange rate that could be perceived as low, “mainly because of the lack of foreign currencies.” At the moment, Matba Rofex discounts a slippage of 7.5% in March and 14% in April.

The market does not see a discrete jump in the immediate future, but it does see the need for a correction, in a context of upcoming currency liquidation. After the historic drought that the last campaign went through, the new 2023/24 harvest presents a much more auspicious performance. “It would be the second largest in historical terms,” they anticipate in the sector. Total production could reach 137 million tons, 65% more than the volume obtained in the previous campaign. If this figure is confirmed, it would be the second largest production in history, only behind the 140 million in the 2018/19 cycle.

Another factor that affects devaluation expectations is the exchange rate gap, which reached a minimum of 8% after the first rise in the dollar in the Milei era. After a marked day framed prior to the debate in particular of the Omnibus Law, the gap with the official exchange rate was positioned at 56% with a CCL dollar parked at $1,293.53 and at 45.9% with respect to the exchange rate of the MEP dollar, finalized at $1,209.52. For the specialist, a gap at these levels “begins to worry.”

The same line runs through Francisco Mattig, economist and Portfolio Manager at Consultatio Financial Services: starting from a gap of 40% “complicates at the exchange level”, although he also considers that “it serves” the Government to “solve the commercial debt with BOPREAL issues”, which is already in its second edition. In any case, he points out that the accumulation of almost US $ 7 billion and the incoming harvest will give the Government tools to control the situation, although “the bad news is that payments for imports have not yet begun to fully impact ”.

Finally, for Repetto, the continuity of the gap will be maintained as long as “it is linked to the surplus of pesos that continues to exist and the few opportunities that are seen in the peso market for assets that do not liquefy you so much.”


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