Future dollar, market thermometer: is devaluation expected?

the market of future dollar It usually has two main roles in the look forward of the investor: it works as a change insurance or as a coverage before a possible devaluation and can also be a thermometer of what the market expects for the evolution of the exchange rate. In recent months, Implicit rates were high due to a strong devaluation expectation, but analysts note some changes in the dynamics behind the Soy dollar starting at $ 200.

As EcoGo economist Lucio Garay Méndez explains to iProfesional, what has been happening for a few weeks is that “The inflow of foreign exchange for the soybean dollar postponed the expectations of abrupt devaluation by 2023 and, today, which We are seeing is a brief calm along the entire futures curve“.

The same observed from Ecolatina, which published a report recently, in which they stressed that the acceleration in the liquidation of agriculture, which already exceeded US $ 5,000 million, contributed to appeaseing devaluation expectations immediately and The goal of accumulation of reserves for the third quarter was feasible which was agreed with the International Monetary Fund (IMF).

The Research Chief of that consultant, Santiago Manoukian, points out that “the process of entering dollars in that way still did not end and is allowing strong reservations“. Likewise, it adds to this positive process of entering the field of the field, the Promise of Credit Fund Income from the Inter -American Development Bank (IDB), which will be around $700 million this month. “These variables are being reflected in the implicit rates of ROFEX’s future dollar contracts, which tended downward in recent times“, describe Manoukian.

Future dollar: who are going to that market

Grupo Broda economist, Elena Alonso, explains that, at the moment, The future dollar is working above all as exchange insurance or as a coverage. “It serves, for example, the importer who needs to cover because he has to access Mulc in 180 days.”

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This is within the framework of the restrictions applied by the BCRA for import financing in the official change market, the Mulc, and that It requires them to look for funds outside it 180 days until the end of the year.

The future dollar serves as a market thermometer, but also as coverage.

Faced with that reality, which gives them a certain unpredictability on what price the exchange rate will be when they can finally access the official market of changes, Alonso explains that “An option is to access the future dollar to cover the expectation of devaluationbecause it allows them to put a floor and a roof for the exchange rate in a sales or purchase operation. ”

What happens to the future dollar since the soybean exchange rate arrived

In which market are those who go to the future contracts of the dollar? Manoukian explains that, Since the implementation of the Soya Dollar, there is a decrease in the implicit rates: it details that there was a 1.6% drop in September 2022, of 3.1% for those of the next month and of 0, of 0, 5% for December.

While for those with longer terms, there is a rise: 0.6% for January 2023, 2.3% for February, 4% for March and between 6% and 7.7% for from April to June. “Implied rates on futures contracts for the second quarter of next year, especially, are climbing,” Manoukian reports.

So, deduce that What the market is showing today is, really, a moderation of devaluation expectations favored by the implementation of the dollar soy to $ 200, but warns that a curve of the curve is seen forward.

The evolution of the rate, according to Ecolatina.

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The evolution of the rate, according to Ecolatina.

And, from the Bullmarket Brokers Research team, they point out that this is related to the fact that “the market is seeing a exchange rate delay or a future devaluation, but observes that the central has fire power in the short -term curve.” This is thanks to the dollar soy, as indicated.

Consequently, What the BCRA does is intervene the dollar futures market so that the exceptional devaluation are memories and combines it with a strong increase in monetary policy interest rates To take pressure from the dollar, which was what he did last week.

It is worth mentioning that seven days ago, as anticipated, The BCRA arranged a 550 -point rates rise And he set the performance of the traditional fixed term, which is the one carried out by human people for up to $ 10 million, in an annual nominal rate (TNA) of 75%, which is equivalent to an effective annual rate (ASD) of 107%. In the same way, he adjusted the index applicable to the liquidity letters (LELIQ), which also went from 69.5% to 75%. The rise was highly anticipated by the market and is in line with the expectations of the City, which anticipated an increase of between 400 and 600 points.

Dollar: Do you think there will be devaluation?

Manoukian details that “what the market expects is that, Thanks to the latest measures to apply a differential dollar for the agro -export sector, the government can overcome a devaluation jump for nowcontrary to what was expected a few months ago, but he considers that it will be difficult for him to sustain this over time”.

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In the same way, from Bullmarket they point out that “while the government continues to put restrictions on the dollar and created distrust in the market, the exceptions and the coverage will always continue to increase.”

Refers to the last Access obstacles that the Government applied for the beneficiaries of energy subsidies and soybeans. Remember that this last measure generated many criticism from the sector and resulted in internal within the government too.

The graph shows the coverage of the curve.

The graph shows the coverage of the curve.

Recall that at the time of knowing the measure, the generalized rejection of the agricultural entities and the Secretary of Agriculture was made public, José Bahillo, he said that the resolution of the Central Bank did not include “producers and producers who have been accompanying the export increase program with so much effort“The post was retweeted by the Minister of Economy, Sergio Massaand the central one later clarified that the scope of the measure was for exporting companies: “The provisions released are not applicable for human people,” he said.

On the other hand, according to Garay Méndez, too At this time, the fact that “the real exchange rate continues to fall behind” plays in the movements of the future dollar., since he anticipates that, at some point he would have to correct, especially considering that “it is very likely that, in October no more soy dollars enter.” Thus, he advances that, the futures market probably rehearses again in the coming months.

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