It is not novelty that the thermometer that economic instability was generating over the years is the dollar. A still dollar is perceived as a symptom of stability, but, paradoxically, it also generates it. Above all, in an election year, reaching the final stretch of the elections with the feeling of economic order is valued in any ruling. And these are the keys to understanding the concern of the government but also of economic agents for the last sprint of the exchange rate that did not become a fateful exchange of exchange, but it was enough to sow doubts for a near future.
The tour. During July, The dollar rose 13.2% while the inflation of the month is estimated at no more than 2%. At least are the numbers that showed two consultants that regularly measure prices: C&T and Eco Go. The CPI of the first seven months of the year would be above 17%, so the dollar would not have “escaped.” However, if we looked at the wholesale dollar that had already jumped at the end of the April stocks, Invecq estimates that the rise was 31.5%, so a sliding could be expected towards some prices, especially those that have a stronger imported component, such as the case of cars. In July, vehicle patented had a record value for the last five years at least, projecting about 700,000 units for the whole year. Tensions about validating or not price lists with “updated” values is another front in which the economic team is immersed.
Precisely uncertainty in these cases and especially the components of the basic basket, is the impact that the dollar rise could have on the CPI. That was an inalienable economic policy goal that explained the economic team and ratified it to the outburst every time Javier Milei himself could.
Unlike what happened for 2024 (throughout the year, the dollar rose 28% and the CPI, 118%), respectively. “The positive thing is that, for the moment, the transfer at the prices of the dollar rise has been limited, with which the real wholesale exchange rate improved 15% if the average July against December is compared”he points out Invecq In your latest report.
For Eco Go, the exchange rate jump did not show an immediate transfer at prices, but do not rule out that they can experience increases from now on. Instead, for Alfredo Romanodirector of Romano Group“The exchange rate is moving and after many years in Argentina there is no transfer at prices. In addition to macroeconomic livelihood, there is trust. It comes from the hand of a government that is very strict in this economic program.”
Federico Pablo Vacalebreprofessor of the UCEMA, points out that “With the tendency we saw, the core IPC and fiscal discipline, I think the scope would be null or very low (if something moves)”. Despite this apparent stillness, concern comes from the side of the origin of the pressures that ended up shooting the dollar, although, as the economist argues Carlos Melconianthe demand for dollars is reaper because the Government does not go to the market to accumulate the reserves that it should since so now was paying debt services to the injection of IMF currencies and future operations. JThat was the “challenge” of the agency when approved the last review that gave green light to send the section of US $ 2,000 million and confirmed the need to increase the still net reserves of red in US $ 3.5 billion.
Catalabre interprets this movement as a layer of the disarmament of the Lefi (financing letters) and that in the last tender could not be absorbed almost 25% of what was offered. As of August, the Central Bank He imposed a level of lace greater at the banks to “dry the square” and that old formula reassured the market, at least temporarily. “After that, we were the dollar stabilized with a slight downward trend, although it is still closer to the upper band than from the lower one for purely seasonal issues,” he adds.
The accounts. The fundamental pillar of the economic program and on which projections are also carried out is that of the fiscal surplus. The Government points to that, to weaken its “success” the opposition tries to undermine it by increasing expenses without financing through the initiatives in legislative process, to approve laws or reverse the systematic vetoes. Jorge Vasconceloschief economist of IERALmaintains that the fiscal impact of the bills that promoted the opposition and a group of governors, If the presidential vetoes failed, the primary surplus of the national public sector would be reduced in 2025 to 0.87 % of GDP, instead of 1.6 % committed, while by 2026 the primary result would be cut to only 0.49 % of GDP, which compares with a 2.2 -point goal. As much as tax collection has been increasing this year, its speed would not compensate for spending expansion. According to measurements of Iaraf, The national tax collection accumulated in the first seven months of the year, would have increased a real year -on -year 2%. But the national spending on retirement and pensions (with bond) in the first half of this year grew by 17% real compared to the first semester of 2024, being the real fall of spending on energy subsidies and in key social programs to compensate for the rise. “There is a change in relative importance of retirement spending in relation to 2024: at the end of the first semester of 2024, it participated with 42% of the primary expenditure and reached 47.3% at the end of this semester”he explains. The trend that has been formed obeys the different speeds of increased real spending on retirement and real primary expenditure: 17% real against 4.6% real only in the first semester.
Post -election scenario. The gaze not only perched on the Sophocon of July and August but on the probable stage after the October 27 elections. Vasconcelos argues that at that time it will be key to achieve a dollar/rates balance by which the real interest rate passes to a level of an annual digit, for which it is required to have minimized devaluation expectations and reduced the country risk premium. For its part, Vacalebre sees in the exchange band system an intermediate solution but that is not definitive for its own limitations. “It seems to me that then another scheme will come that allows at some point to remove the corporate stock, since human people can buy, but the restriction continues for what is the companies,”he points out.
The optimists see in the growing participation of energy and mining in exports and the gradual removal of tax pressure to the field to project May influx of currencies. But you have to reach that instance and turn uncertainty into something passenger. Again, the dollar becomes the protagonist. His stillness, finally, was just a long nap.
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