BCRA has already bought 40,000 million dollars a month of debt in pesos: what effects will this have?

At least through 2023, the development of peso debt will be a central financial issue. The possibility of renewing the maturity before the election is a big disadvantage of the economic teamwith $6.1 billion already accumulated in July, August and September.

Since that debt renewal It depends on whether there will be an acceleration of inflation and a jump in dollar prices on the stock exchange.

Debt in pesos: intervention

Silently, the Central Bank intervenes in the peso bond market. According to a recent report by Anker Latin America, “The monetary issue for the purchase of government bonds in pesos by the BCRA has reached $38,000 million so far this month.”

The amount, beyond the official desire to maintain parity, serves to indirectly finance, in certain amounts, the State Treasury, taking into account the limitation imposed in the agreement with the IMF to issue directly to cover the fiscal deficit.

Debt tender held at least last week He showed no difficulty in getting the Treasury to win $401,000 million, at a rate of tip over of 134%.

The total offers of the treasury bill market in these tenders should not be taken too much into account, given that always public entities and some private ones, at the request of the Minister of Finance Eduardo Setti, inflate orders with orders at consciously high interest rates. rates. that they will not be accepted.

The current weight market pattern is most likely to persist in the coming weeks. BCRA also intervenes with the Ministry of Finance in tenders, arranging maturities in the months of July, August and September.

Don’t forget that August’s PASO will determine with great certainty who will be the next Argentine president. Since the candidates are still unknown, there is no impact on the public debt.

Last week’s statement by Juntos por el Cambio didn’t really have any effect on the beach, but more than anything in the remaining months until PASO. August is long in Argentina.

Sky high rates

Another element to consider is Argentina’s debt rates cooling number of 118% per year effective arising from the last tender for debt. Expected inflation, now higher, prompted the switch, as the newspaper reported last week, to everything that is harmonized with the CER.

Investor doubts were also reflected in the latest UCA economic uncertainty index report for January.

“During that month there was a sharp increase in the level of economic uncertainty. This large increase reverses the five consecutive declines seen since the peak in July last year due to the resignation of Martín Guzmán. To a large extent, this recent trajectory is explained by greater concerns about inflation,” he points out.

During the rest of the month financially, we look at what happens with the exchange market and what it can indirectly generate in peso debt.

The non-fulfillment of the target with the IMF on the accumulation of reserves by March 31 is already a fact: in the next few days, a mission of the Ministry of Economy will travel to predict waiver or directly renegotiate that clause of the agreement. There is a gap of US$2.3 billion between the US$7.8 billion set as a target and the US$5.5 billion recorded in the BCRA coffers so far.

Surely IMF staff will look the other way, avoiding making noise with Argentina ahead of the election.

Whilethe issuance of endogenous pesos by BCRA, with Leliq and passive passes, continues at full speed: inventories according to the latest Monetary Report stand at 11.1 trillion pesos, limiting any attempt to slow inflation.

Actually, the expected price jump included in the bonds is about 7% per month. Rates in pesos remain slightly positive for government bond issues.

The context remains as complex as it is challenging. The biggest problem will surely be who takes office on December 10.