Caputo bets on Carry Trade: solution or time bomb?

This new stage of the Milei and Caputo model bears the mark of a strong increase in dollar indebtedness and the deepening of a financial valuation scheme and capital escape. The exchange backwardness is a necessary condition to sustain this “plan”, together with fiscal austerity, which keeps wages and retirements sunk.

During 2024, in the country two cycles of Carry Trade or Financial Bicycle took place. The first was developed between February and April, coinciding with the positive balance of the commercial balance, as a result of postponing the payment of imports and the drop in imports due to the devaluation of December, mainly. The second moment of the Carry began in August 2024 and began to disarm this year, due to doubts about the economic plan (and its exchange regime) as the impulse generated by the dollars from the money laundering that fed it was exhausted.

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To roll the financial bicycle, the Caputo scheme allowed, due to the exchange delay and the mini monthly devaluations (2% first and then 1%), lower than the interest rate, That investments in pesos would give a greater yield to the dollars in dollars. This positive yield differential in pesos, in addition, sought to reduce the demand for dollars that were depleted, and, in that way, maintain controlled inflation. A recent report [1] of the Cifra-Cta center said that the average monthly yield was 11.8% in dollars During the first cycle of Carry, the one that was cut in May “due to the effect of the reduction of interest and the rise of the MEP dollar, which strangled the rent in dollars.” The second bubble corresponds to the period that begins in August, based on the convergence of the reduction of the financial dollar, which implied an interest rate monthly average in dollars of 7.2%.”

The availability of cheap dollars to “get off on time” began to scarce in the first months of the year due to the structural problems of the economy accentuated as a consequence of the economic plan. Debt payments, commercial opening, and the exchange delay sustained with the direct intervention of the BCRA, were increasing the “negative reserves” to levels not seen from the end of the FDT government. The uncertainty about the government at its worst political moment and the outbreak of the global trade war, raised devaluation expectations. Alternative dollars fired, also the country risk and inflation had its highest measurement in 6 months in March (3.7%). Thus Milei and Caputo arrived in the background, delivered.

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One more lap: New speculative bubble with vulture funds?

Exporters, banks and large companies were the main participants of the financial bicycle, but natural persons (savers) and sectors of the national and provincial public administration also participated. In addition to the fixed deadlines in pesos, the most used instruments for the Carry are the LECAP (Treasury Lyrics capitalizable in pesos) of short term, with more profitable rates than those of the fixed term, the Boncap (Treasury bonds capitalizable in pesos), which have an expiration of more than one year, and the bancer (treasure bonds adjusted by CER). He Increased debt in pesos For these treasure emissions it is another bicycle corollary. According to the figure report, the placements of these letters and bonds amounted to 95.6 billion under the government of Milei.

From the new agreement with the IMF, and with the arrival of the first disbursement that strengthened the Central coffers, Caputo announced modifications to encourage the arrival of foreign investments. Thus, the monetary entity chaired by Santiago Bausili confirmed that “it will authorize non -resident investors to access the free market (MLC), without prior compliance, for the repatriation of the new investments they make.” They are asked for a 6 -month parking, in the election year the government seeks to reach October without major shocks in the exchange level, a difficult task due to external and internal volatility.

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The JP Morgan Bank liked this, in a recent report he recommended investing in the country. In 2018, Caputo guaranteed millionaire businesses for speculative funds that had entered to participate in the financial bicycle. “Between December 2015 and early 2018, approximately 8 out of 10 dollars that entered the country had their origin in debt placations and speculative capitals,” says a BCRA report. The speculative capitals added US $ 12.3 billion in that period.

Given the change in economic conditions, at the end of April the first run headed by the former Caputo employer, Bank JP Morgan took place. That day Federico Sturznegger sold the sum of US $ 1,470 million, a record. But nothing calmed the vultures that continued to demand dollars, with the reserves for the floor and the dollar shot, on June 20 Macri and IMF confirmed a new agreement. At that time there was no stocks, Caputo took the reins of the BCRA and in just 3 months the US $ 15,000 million of the first disbursement was skipped of the stand by, financing the exit of these groups. After this he was ejected from the government (at the request of the fund) and his replacement – Guard Sandleris – announced the beginning of a exchange scheme between bands. Any similarity to the present is not coincidence, they are the old IMF recipes.

Different investigations confirm that the US $ 44,000 million that the IMF gave to macrismo – such as a clear political support – were used to make the capital escape of the private sector, output of speculative capital (such as Blackrock or Templeton, large pension funds) and external debt payments. Caputo and Milei, in collusion with banks such as JP Morgan, prepare the conditions for a new round of Carry Trade with these vulture capitals. Some analysts report that, from the Government, they expect that in the next two years the entry of financial capitals to rise to 12.5 billion, recreating a new speculative bubble that, when it is punctured, only worsens the effect that the economic and social crisis already imposes on social majorities.

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Who pays the Carry Trade party?

In the hegemonic media economists and officials circulate promoting and explaining the mechanisms of the financial bicycle, a “legal” and accessible practice, they maintain. The case of Aracre on TV (former advisor to the last Peronist government), encouraging people to change their dollars to put them on this timba, is just an example. But none of them clarifies that the insured profit is for large groups, which have privileged information by the government and banks, which allows them to be a step forward. The only thing that these speculative movements are looking for is to obtain a short -term financial income, there are no investments in the real economy and many times the sudden disarmament of the positions in pesos that turn to the dollar worsens the crisis. Under macrismo, Exchange runs caused a devaluation of more than 100% of the Argentine weight.

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In the country there is a enough experience with these short cycles of speculative capital, which enter when they see profitable conditions and coincide with governments that tend to deregulate the “capital market”. To finance the speculative party, the cost falls on those who pay the high interest rates, a condition to guarantee gain, such as those that have loans in pesos. Also the popular majorities that suffer the consequences of exchange backwardness, and as the fall of industrial activity, the increase in dollarized public services, recession and loss of jobs and the sinking of consumption by means of wages and deteriorated retirements. Milei and Caputo’s is an economic plan that sharpens the structural problems of the national economy. They resorted to indebtedness with the IMF to continue guaranteeing the profits of the concentrated groups and now seek to enter vultures, while maintaining a large fiscal cut on sensitive areas such as health, education and retirements.

The same IMF that lowered his thumb to the “Toto” in 2018 now lends him $ 20,000 million, and not only that, the first disbursement was 60% of the loan. Although the new flotation scheme between $ 1000 and $ 1400 bands debuted closer to the lower band, the movements vary daily. And the questions about what will happen to the liquidations of the “field”, the rise in inflation and the swings of the international context, can tip the court. The implementation of a new bicycle – which only seeks to short -term financial gain – increases the exchange volatility that will increase in the face of October.

The IMF puts money supporting this direction of financial speculation, indebtedness and escape. From Macri to Milei the fraudulent debt with the IMF will be US $ 57,200 (in 2026). The director of the IMF was encouraged to say without tapping to whom to vote in the next elections. He Sovereign ignorance of debt is the only measure that this adjustment plan really faces, this looting to which all the governments of the day were adapted. In complementarity, a measure such as Nationalization of the banking system Under workers management, he could end the maneuvers of private and highly foreign banking; which viable the mechanisms of the great capital escape. Next to State monopoly of foreign tradewhich would allow to combat the fraud of superfacture of exports and excessive imports without specific endless. This proposal on the left seeks to think of an alternative to capitalism in crisis, in perspective of democratic economic planning and from below, depending on the needs of the majorities, in opposition to the gain of a few.

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