Despite the rise in the dollar and the exchange rate gap, the Government insists: “No devaluation is foreseen”

View of an exchange house in the financial area of ​​Buenos Aires (Argentina). File photo. EFE / David Fernández

The Government seeks to clear expectations of devaluation after the elections this Sunday. In the economic team they do not see “objective conditions” for an exchange rate jump and different officials They went out to ensure that the record of the blue dollar, which this Thursday reached 206 pesos, should not impact prices.

The presidential spokeswoman, Gabriela Cerruti, ratified today that “No devaluation is foreseen” after the legislative elections next Sunday, and also stressed that “the economic data show” that it is going through a moment “of progress and reactivation that are really exciting.”

“The world does not begin or end after the election. Monday is governed like every day. We hope that this continues to be a normal country after having undergone a transparent electoral act as is the tradition in the country, ”Cerruti said at a press conference held this morning at Casa Rosada.

In the economic team they do not see “objective conditions” for an exchange rate jump and different officials came out to assure that the record of the blue dollar should not impact prices

Regarding a possible devaluation, he emphasized: “I don’t know what the other economists say. The Minister of Economy, Martín Guzmán, says that a devaluation is not foreseen. The macroeconomic indices present us with a reality of great optimism, with caution, but to continue advancing in the direction that we have considered ”.

At the beginning of his usual conference on Thursdays, Cerruti mentioned that there are economic data “they speak to us of a moment of advance, of start-up, of strengthening, of reactivation of the economy that after four years of crisis of the previous government and two years pandemic, we are really excited “. In addition, the spokesperson stated that “the blue dollar is an illegal dollar that is managed not only with the expectations of the macroeconomy but also with another type of expectation”.

In the economic team, they pay more attention to the exchange gap between the wholesale dollar managed by the Central Bank and the financial dollars, mainly the cash with settlement, and downplay the distance between that quote and the blue, which they consider a marginal market .

The Government downplays the blue market but looks closely at the exchange rate gap
The Government downplays the blue market but looks closely at the exchange rate gap

The exchange rate gap, they say, is part of the official concerns. From an official office they stop especially in one of the effects that has a gap that is rising and sustained over time and that may imply an impact on the main source of dollars that the Argentine economy currently has with the external financing market closed: exports.

The logic is that a gap of this magnitude causes, by definition, a greater expectation of devaluation in the future as a requirement to close that distance between one price and another. And that, for foreign trade, because It drives an acceleration of imports, as companies seek to anticipate and obtain inputs and final goods with the current wholesale dollar price before their price rises. This would imply greater pressure on the reserves due to a greater demand for foreign currency from the Central Bank to make these purchases abroad.

And, on the contrary, the reaction among exporters would be the opposite: delay settlement and wait for a more favorable exchange rate. In a context of scarce reserves, it would imply a tighter tap of export dollars, and more to a few weeks before the sales of wheat abroad begin, which represents a relevant income of dollars.

From an official office they stop especially in one of the effects that has a gap that is growing and sustained over time and that may imply an impact on the main source of dollars that the Argentine economy currently has with the external financing market closed : the exports

Aid from the external front is one of the factors on which the Government relies to imagine a horizon of some exchange rate stability in the coming months. In fact, the last trade balance data was celebrated by the Executive Power, since counted that exports reached 58.277 million dollars, so they were the highest since 2013, something that partly responds to better international prices and partly to higher quantities sold.

A recent report by the consulting firm Analytica considered that in the coming months reserves could be reduced by some USD 6.5 billion between the demand itself and payments to international organizations, mainly the Central Bank. Even without counting the swap with China, the reserves would remain in negative territory. “It is difficult for this scenario to occur, since first, the government will further restrict access to commercial and financial dollars, consequently affecting the economic recovery”, He mentioned.

According to a study by Ieral, from the Mediterranean Foundation, “the task of reducing the gap, assuming the subsistence of exchange control, requires a ‘general equilibrium’ approach, since specific measures produce fleeting results, and the intensification of the controls leads to effects contrary to those intended ”.

Central Bank reserves could be reduced by some USD 6.5 billion in the coming months.  EFE / Cristina Terceiro / Archive
Central Bank reserves could be reduced by some USD 6.5 billion in the coming months. EFE / Cristina Terceiro / Archive

One option would be to give more volume to the cash market with liquidation. In this sense, from IERAL it had been proposed to derive the settlement of the ‘dollar card’ to the CCL, both for the payment of foreigners for consumption in the country, as well as for local ones abroad. In this way, the incentives for foreigners and natives would be leveled, with a simple mechanism within the reach of card operators and banking entities, while increasing the volume of operations in that market ”, Ieral considered.

This Wednesday the Secretary of Internal Commerce, Roberto Feletti, had ensured that the rise of the blue dollar “It does not have to impact” on the food and drug price agreement, given that the Central Bank assured “the necessary foreign exchange for imports.”

Such a high gap drives an acceleration of imports, since companies seek to anticipate and obtain inputs and final goods with the current wholesale dollar price before its price rises and delays the liquidation of exports

“In the case of food, the use of imported inputs is limited. In the case of medicines, no, but as long as companies can access the official dollar to pay for their imports, blue measurement does not have to impact”, Resaltó Above.

During a press conference at Casa Rosada to officially present the drug price freeze, the national official pointed out: “To the extent that the Central Bank supplies the business sector with the demand for imports, and the projection of foreign exchange that it has gives perfectly given to do that, it would not have to correct prices based on the price of a market that is illegal ”.

“We all sympathetically call it blue, but it is an illegal market. To the extent that the business sector can import at the official exchange rate, the only correction it has to take on its costs is the value of the official exchange rate ”, he argued.

KEEP READING:

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Two months of exchange rate tension: how the dollar has evolved since the PASO
Inflation, the dollar and the IMF: what the government’s agenda will be like after the elections
The even-numbered curse: for the economy, 2022 will be mediocre to bad



Reference-www.infobae.com

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