Dollar: Sergio Massa receives bankers and there is expectation about the market’s reaction to the new exchange measures

The Minister of Economy, Sergio Massa, leads a working breakfast from 8:30 am with representatives of banks, investment funds and insurance companies. The meeting generates expectation, especially after learning that the Government will force state agencies to part with sovereign bonds in dollars, both under local (AL) and foreign (GD) legislation.

With financial dollars on the rise, the blue dollar closer to $400 and the BCRA reserves in the red, Massa wants this mechanism to serve a double objective: the stability and liquidity of the financial market, which has been in turmoil in recent weeks, and to remove pressure on inflation.

As reported by TN, the strategy aims to absorb excess pesos that put pressure on inflation and reduce the debt in dollars under foreign legislation, starting from the placement on the market of a part of the ALs and withdrawing the GD bonds. In this way, it seeks to obtain room for maneuver to intervene in the financial dollar market (CCL and MEP), without resorting to reserves, as had been the case.

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Although it was expected that this Wednesday the decree would be published in the Official Gazette so that more than 130 public organizations get rid of the dollar bonds, that did not happen and the details of the operation will be known after the meeting in Economy with banks, investment funds and insurance companies.

At this working breakfast, in addition to this strategy, officials are expected to propose to private companies that they can subscribe bonds in Treasury dollars, keep them in their portfolios for a while and with interest pay dividends of up to 40% that, from next month, they will be able to distribute among their shareholders, in equal and consecutive monthly installments until September.

Sergio Massa meets with the banking sector amid renewed currency tension. (Photo: Ministry of Economy).

Massa seeks to absorb pesos and reduce debt in dollars

The measures were defined by the Palacio de Hacienda, in the midst of the strong inflationary escalation of the last two months. The idea is to create tools that allow, in addition to absorbing pesos and reducing debt in dollars, to act in the financial dollar market without affecting reserves.

In the Ministry of Economy they also argue that it will also allow them to concentrate -together with the Central Bank- the management of bonds in dollars, disseminated in different public sector organizations, including the Sustainability Guarantee Fund of the National Social Security Administration ( ANSES).

Also read: Drought and delay with inflation: the reasons for the record jump of the blue dollar that left it at almost $400

They are also confident that it will help to reduce the volatility of the financial dollar market and the capital market, to minimize the impact on inflation and to consolidate the Treasury’s financial program.

According to what they say, it equates to AL bonds as a reference in the financial dollar market and “lifts some exchange restrictions, as a first step towards a principle of normalization.”

New tender for debt in pesos

In addition to trying to decompress the pressure on financial dollars, the Ministry of Economy is facing a new debt tender in pesos this Wednesday.

After the exchange of bonds that took place at the beginning of March and the increase in the interest rate ordered by the Central Bank, the Treasury has to cover close to $700,000 million of maturities that remained after the conversion operation. It will offer a mix of titles with pre- and post-election expirations in an attempt to appeal to the markets.