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Itaú Believe BCRA Aiming To Make Treasury Bonds More Attractive

ARGENTINA
  • As a reminder, Argentina’s central bank decided to implement a new monetary policy rate, now setting the 1-day repo rate as the new reference rate (currently 100%), instead of the Leliq rate (133%).
  • Itaú have noted that the monetary authority announced they will stop auctioning Leliqs, leaving the new monetary policy instrument to absorb excess liquidity.
  • The central bank also set a minimum interest rate for fixed-term deposits at 110%, down from the current 128% (Badlar rate). Additionally, the monetary authority will continue offering inflation-adjusted fixed-term deposits (so called UVAs). Regarding liquidity injections, the BCRA may exercise active repos and offer puts on Treasury instruments.
  • In Itaú’s view, the strategy of the central bank aims to make the treasury bonds more attractive, instead of the 1-day repo rate. In fact, this week the treasury will offer CPI-link bonds (BONCER) and fixed-rate bonds (LEDES), the latest after several months.
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