Dollar today: why the Fed’s speech impacted the local market

Despite the fact that inflation in the United States slowed down in July, the Federal Reserve (Fed) confirmed this morning that the American economy will need a tougher monetary policy “for a while longer”. The news has a negative impact on emerging markets, as investors take refuge in safer assets, which explains why Argentine stocks and bonds spend the day in negative territory.

“Wall Street leans towards a negative reaction, as the Fed leaned a tone further’hawkish‘ (contractive monetary policy) by reaffirming that it will continue with a restrictive policy bias in search of continuing to fight with inflationeven acknowledging the collateral damage that such a strategy could have in the short term from an economic slowdown. Given the pause in the north wind, domestic assets are leaning towards taking profits after the important recovery -although from minimum levels- that they had recently been testing,” said Gustavo Ber, head of Estudio Ber.

In that context, today the S&P Merval operates at 139,196 units. It is a daily drop of 2.5%, so it leaves behind the maximum nominal values ​​that it marked in the previous days. In the panel of the Buenos Aires stock market, the biggest drops are for Cresud (-6.1%), YPF (-3.7%), Central Puerto (-3.6%) and Cablevisión Holding (-3.6%) .

The same trend is observed in Argentine shares listed on the New York Stock Exchange, better known as ADR, since the numbers in red predominate. Cresud papers sink 5.3%, followed by Globant (-5.1%) and Ternium (-4.2%). In the opposite direction, Banco Supervielle (+6.2%), BBVA (+3.8%) and Banco Macro (-3.3%) rose.

Federal Reserve Chairman Jerome Powell

“Our assets follow the regional wave, which, on the other hand, looks north with some concern that the Fed will show more toughness than expected. However, the strong global dollar and the rise in interest rates seem to have weighed less in this historical time than finds strong support for our region thanks to the high prices of raw materials product of the growing geopolitical tensions”, they explained from Delphos Investment.

However, from the stock exchange company they remarked: if the Fed continues with that “blunt determination to cause a recession end inflationemerging countries -Argentina included- are likely to be ultimately adversely affected.

The bonds of the last debt swap also operate in negative territory. Abroad, sovereign bonds in dollars fell to 2.5% (Bonar 2029), while at the local level the decrease was 4.1% (AL29). Consequently, the country risk advances 12 units and is positioned at 2328 points basic (+0.5%).

“The volatility in the global market returned. With raises at the beginning of the week, but that ended negative on Friday, after the words of Jerome Powell in Jackson Hole. With inflation already at calmer levels, the head of the FED once again sounded ‘tough’ by insisting that until inflation is controlled, the FED will continue to raise the rate. The market does not like this music and it ended on a very negative Friday”, agreed Fernando Marull, an economist at FMyA.

In the first negotiations of the day, the blue dollar was offered at $292, $1 less than the previous session (-0.3%). It has been almost a month since the ticket that is traded informally managed to stabilize below $290, values ​​far from the $338 that it registered in mid-July.

“The dollar still has room to go down to a 70% gap, since if it stabilizes at $290 it is still a 40% jump in two months. Recall that the run started at $210. But for that, concrete signals and measures are needed, so that the exchange rate can continue to decline. It fell with the announcement of Sergio Massa in Economy, which served as expectations, but it is not enough. This week you had the news of a lower fiscal deficit, the Central Bank stopped selling reserves and it ended the dire and worrying dynamic of how many dollars he was losing every day, and there was a decree that generated savings of $128,000 million. There were signs to deepen or resume the trend, momentary, to settle lower”, indicated the financial analyst Christian Buteler.

The same is happening with financial exchange rates, which have fallen for the third consecutive round. The MEP dollar is trading at $283.71, a daily drop of more than $4 (-1.5%). The cash with liquidation (CCL) sinks $12, to $283.84 (-4.1%). In this way, the blue was once again the highest price in the foreign exchange market.

“After hectic days in the markets, this week there was a certain calm. Far from having solved big problems, the market gives the minister a truce [de Economía] Serge Massa. The reasons for this ‘little summer’ lie in the fact that the Central Bank stopped losing reserves, the cost being basically the loss of welfare due to the brake on imports. But if there are no concrete and permanent solutions, the market will not take long to show tension again”, warned from the economic consultant LCG.

The wholesale exchange rate appears on screens at $137.65, Twenty-five cents higher than yesterday (+0.2%). Contrasting with the blue dollar, the gap was positioned at 112%. It has been 45 consecutive wheels that the gap is above three figures.

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