In case another copy was missing for the collection of exchange rates, the need to have reserves in danger of extinction created a new one: the silo-dollar. Calculator in hand, soybean producers and collectors began to evaluate the acceptance of the “superior” proposal that the Central Bank approached them to try to capture the elusive dollars. Basically, it improved his income between 10% and 15% over the official exchange rate, but only the percentage over the free exchange rate (the financial or the “blue”) rose from 27% to 30%, estimated by the economist Fernando Marull. .
no remainder. The evaporation of the international reserves of the monetary entity is not something surprising nor was it aggravated by the mediatic resignation of Martin Guzman. In the list of claims, he precisely referred to what he needed to have under his orbit to control the most sensitive variables: the Secretary of Energy (because of whose tariff policy Argentina went from being a net exporter to a growing importer in a short time) and the central banksince the bomb imploded there that at the beginning of June marked the collapse of Argentine bonds.
The impossibility of continuing to swell the snowball of debt in pesos, the closure of access to international credit, the difficulty of raising more without eroding activity, and the veto on the reduction of public spending, left few escape routes. For George Hilleconomist at IDESA, the outcome is produced by the insistence on anchoring the official exchange rate to try to put a ceiling on inflation: from January 2020 to date, the “commercial” dollar rose 60% in 30 months against 192% of inflation without tariffs (regulated). It is difficult to believe in this context that the exchange rate is not accumulating pressure, as when in October 2020 the “free” price was quoted at $190, about $445 at the end of July prices.. At that time, monetary policy was “tightened” to try to contain the emission tsunami with which the Government had come as an emergency during the stoppage of the pandemic. However, the second half of last year (electoral) eased the issue with the cost of inflation in terms of a new step: from 2.5% to 3%, first, and from this summer, between 4% and 5%. Not even the conclusion of the agreement with the International Monetary Fund could contain it. “The failure to comply with what was agreed is irreversible because the IMF set the goals in nominal pesos and with the inflation that occurred they have already been exceeded. Inflation will continue to be the escape valve to liquefy some of the fiscal deficit, but that is not valid for the IMFwhich will also have to forgive through a waiver, ”he explains.
Prices. For its part, Maria Castiglionipartner of C&T Economic Advisors It also observes that the misalignment of relative prices worsened with the unequal trajectory of the key variables: the exchange rate, the rates of public services and the price of “tradable” goods, that is, those linked to foreign trade. “We are at levels of distortion similar to those in 2015 and the accounts do not add up. It is a short blanket that makes any isolated economic policy decision insufficient”, analyzes.
What he points out is symptomatic: when the Macri administration began, there was a gap (which was not more than 50%) and it was bet that prices had already discounted the subsequent devaluation with the exchange rate unification. Inflation jumped in that first year, added to the updating of rates that were also delayed. That is precisely the government’s fear: that an exchange rate correction would add fuel to the fire. The private measurements of the IPC already estimate a rise of between 6.5 and 7% for July, but with a considerable drag for August, the month in which the raid of rate increases begins. The bus ticket will rise 40% and it is not enough to mitigate months of freezing and rising costs. “We see that the Government is reluctant to open up and even with the proposals to segment rates for people with higher incomes, it is not enough and continues to be relatively behind after three years of delay”, he clarifies.
In his opinion, a devaluation of the official exchange rate has an immediate inflationary effect, especially if it is not accompanied by a comprehensive plan. On the other hand, an exchange split would allow the Central Bank to be able to capture reserves that today pass through the financial channel and release them at the resulting exchange rate (higher than the official one, but perhaps lower than the current financial one).
With the persistent fiscal imbalance, the need for financing was what ended up revealing the distrust of the “market” regarding the sustainability of the debt in pesos, with which each periodically the Treasury or the Central Bank absorbed through a window what emitted by the other. Repeatedly, former Minister Guzmán referred to the fact that dollars were not the same as pesos. Perhaps it was a matter of time until, in June, that source of financing also dried up. That precipitated his own resignation by being left without another of the tools with which he could kick substantive decisions that had not had the necessary political backing.
In the last placement of debt, the Central Bank validated rates of 70% per year, pardoning inflation somewhat, with what would seem to indicate the path of monetary tightening, consistent with the fiscal austerity measures, still under review.
future harvest. The other part of the equation is the trade surplus, checked during the winter by the import of fuel and gas to alleviate the peak of winter consumption. Internally, the Government only has two tools: withholdings and devaluation. But in the medium term, it will depend on the production that is decided in the coming weeks and the weather, of course.
roman danteManager of Market Analysis and Consulting at fyo, underlines that for now the agricultural inputs are being bought and liquidated at the official exchange rate, which is the same at which the grain is being sold. “Inputs rose very strongly (they are going down somewhat, but they are still expensive). And it is not because the parallel exchange rate is transferred to the price, but the variation in the import values of fertilizers and agrochemicals”, he adds. The worrying thing is that, in this way, the projected costs for the sowing of the 22/23 campaign compared to the current future price of grains, generates little profitability or direct losses.
By the way, David MizzoChief Economist of the FADA Foundation The area of wheat that has already been sown is estimated to end up falling by up to one million projected tons. As for corn and soybeans for the summer, he affirms that an estimate cannot yet be made, but there is nothing to suggest that it would drop. “LWhat we are seeing is that all the improvement in prices that the war in Russia and Ukraine had generated has already been erased, we have already returned to the levels of the beginning of the year and the strong dollar at the international level suggests that the price of The grains”, he concludes.
The concept of “unexpected income” seems to have evaporated before the effective date of any tax that would eventually capture it. Everything goes back to the basics: nothing is magical and scarcity is the foundation of all economic policy measures. The only lever to escape from this short blanket is the “confidence” effect based on concrete credibility: that the enormous fiscal hole that accompanies Argentine politics for the last half century at least shows palpable signs of attention in a systematic plan. And the discussion of how much it weighs on the multiple causes of inflation will be left for later.
