Massa splits, due to the urgency of dollars, and Milei distributes, due to the need for votes

The two presidential candidates of Argentina who they will contest the runoff in less than a month, Sergio Massa and Javier Mileithey have already launched to the third and final stretch of the campaign. From the first hour of Monday, Each one has its own urgency.

The libertarian directs his efforts to seduce electoral allies and add voteswhile the official searches tempt exporters and raise dollars increasingly scarce in the country.

Milei distributes

Milei came out to make concessions in unexpected places: He invited representatives of Together for Change to join his space and even —believe it or not— the ultra-left of Myriam Bregman.

Milei’s strategy will be show some more discipline in space and prevent dissonant voices scare away the vote of conservatives and progressives, according to a person with direct knowledge. The rest, they say, will be accommodated by the economy alone.

Massa unfolds

Massa seeks to reach the elections without devaluing the official weight. Pressed by the shortage of dollars in the market, he was already forced hereProvide a better exchange rate to all exporters, by allowing them to sell 30% of their foreign exchange obtained in cash with settlement. The new measure grants a dollar closer to 540 pesosagainst the wholesaler’s 350.

With this, the Ministry of Economy aims to raise around US$4 billion in these 30 dayssaid a person with direct knowledge. The figure is similar to that of months considered “normal”—non-electoral—like last September.

Bunker Sergio Massa

Opportunity or trap in futures?

Meanwhile, the futures market shows a sharp drop in demand for currency hedging. The future of the Argentine peso at the end of December fell from levels of 800/USD to 619/USDafter touching an intraday of 540 this Tuesday.

Does it mean that investors now believe that Massa will manage to avoid a devaluation? Not necessarily.

The market could be seeing that the Government could make “devaluations” without needing to adjust the exchange rate that governs peso future contracts (the well-known “A3500” regulation), by allowing exporters sell part of the currency in cash with liquidation. An exchange rate split under this modality would imply a kind of “regulatory trap” for those who sought to cover themselves from a devaluation in the derivatives market, such as the Rofex or the MAE.

Ballottage Massa – Milei: why the economic strategy that each candidate addresses will be key

Still boats

Dollars are so scarce that They complicate even the state oil company YPF itself. The company is prohibited from accessing the exchange market to pay two of its main suppliers abroad and, in this way, unload at the port the diesel and gasoline that three ships have already broughtaccording to two people with direct knowledge.

It is estimated that the load It has a volume of 120,000 cubic meterswhat they represent 7% of monthly sales in the country (about US$150 million). The delay can cause more problems for supply the domestic market, in a context in which the supply of fuel is pressured by rate regulation and the exchange rate. YPF representatives did not respond to a request for comment.

The figure that speaks: 10% of CPI in October?

The central bank prays that October inflation settles below 10%. The first two weeks of the month reported a cruising speed of around 8% or 9%, based on its own high-frequency measurements, said two people with direct knowledge. But the rise in the parallel exchange rate, and the adjustments of some regulated prices after the elections, They could have added pressure on the end of the month and returned the indicator to the monthly double digit.

©2023 Bloomberg LP

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