Dollar: New Examination Today After Cristina Kirchner’s Letter About the IMF

The letter released by Cristina Kirchner on Saturday will be a new test for Argentine assets. Investors had been waiting for the vice president’s reaction after the legislative elections and her vision of the negotiations with the IMF. For this reason, eyes will be on the reaction of bonds and the dollar today, in what will be the first verdict of the markets, which harshly punished Argentine assets in the last two weeks.

Surely today the first comments from economists and investment banks about Cristina Kirchner’s sayings, she turns to support the renegotiation with the IMF. “Kirchnerism has a historical attribute that is to have paid the debts that other governments generated.” He then names, how could it be otherwise, the debt cancellation carried out by Nestor Kirchner, as well as the restructuring carried out in 2005 and 2010 with private creditors.

However, he warned about the content of an agreement with the Fund and its possible consequences: “It is a historical moment of extreme gravity and the definition that is adopted and approved may become the most authentic and true stock available. memory for the development and growth with social inclusion of our country ”.

On the other hand, in what can be considered a positive sign, Cristina recalls that “the pen” to define the agreement is held by the President, Alberto Fernández. Of course, it appears from the text itself that it will not save any criticism if applicable.

Country risk closed the week at the highest levels since the renegotiation, at almost 1,900 basis points. At the same time, the dollar is very firm. The free price exceeded $ 200 and the cash settlement was $ 215. In addition, the decision of the Central to prohibit financing for the purchase of tickets and packages abroad generated a lot of noise in the market. The Minister of Productive Development himself, Matías Kulfas, recognized the need to manage reserves and preserve them for the production process.

Cristina raised doubts regarding her support in the government’s negotiations with the IMF. On the one hand, she assured that Kirchnerism “always paid the debts”, but at the same time she stressed that the commitments assumed could be very burdensome for society.

Of course, in addition to the reappearance of Cristina, the main factor that will impact prices today is Ómicron, the new variant of Covid-19 that emerged in Africa but is already generating infections in Europe. Israel ordered the border closures for two weeks, in what represents the first strong reaction by a country to halt its advance.

The first reaction of investors was to seek refuge in safe assets, generating a negative impact on assets in emerging countries in the run-up to Thanksgiving in the United States. Friday was also a negative day for stocks globally, although it was a more limited day on Wall Street.

Futures in New York marked a bullish start for both stocks and oil, which could recover part of the losses of the last days. However, it is still early to draw some conclusion about how the market will behave throughout the week.

Should fears grow regarding the possibility of new border closures and economic activities at a global level, further negative impacts on Argentine assets, which are among the most risky for investors, can be expected.