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urgent interest rate hike

The Minister of Economy must face maturities for $500,000 million this month. End of negative rates? Concern in various sectors

By Claudio Zlotnik

09/06/2022 – 12,19hs

The president of the Central Bank (BCRA), Miguel Pescebelieves that the Minister of Economy, Martin Guzmanshould raise the interest rate in the next placement of CER bonds -an operation scheduled for next week-, with the aim that the performance of these papers is positive; above the inflation.

The concern in the BCRA is that the strategy carried out by the Minister of Economy – to launch CER bonds at a negative rate – trigger a wave of sales, similar to what happened in the last few hours in the financial market.

In the market, precisely, they believe that the Central Bank could intervene this afternoon to support the price of the bonds, in case a wave of sales repeats itself.

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The Central Bank asks for a rise in the interest rate to avoid a currency run

High interest rates to avoid a run

This month titles for some $500,000 million expire, and in the market they fear that the Government is complicated for the renewal.

For this reason, the head of the Central considers that Guzmán should put aside his strategy of offering negative rates in the next debt auctions.

In the last public appearances, Pese was in favor of the “positive” real rateswhich are above inflation.

Faced with the possibility that the Government might be forced to restructure the papers in pesos -as already happened towards the end of Mauricio Macri’s mandate-, there were investors who went out to liquidate bonds, which led some of those titles to show a skid of more than 10% yesterday.

On the other hand, in the official offices they believe that the need for pesos by the companies, which must face the payment of Christmas bonuses in the coming days, worsens the situation, since there is a demand for pesos that is much higher than what is I was looking at the market.

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