Even the most furious critics of the system, recognize the bimonetary nature of the Argentine economyna. However, perhaps what they do not agree on is whether the validity of the dollar as the usual currency coexisting with the peso (and sometimes, even displacing it) is the cause or effect of Argentina’s strong macroeconomic imbalances.
It is already naturalized that for the purchase of high-value goods (real estate, machinery of all kinds and certain kinds of cars) and for the formation of assets, or given the volcanic trajectory of the Argentine economy, the protection of capital.
Diversity. The first question when talking about the dollar is which one is being referred to. In the first week of July its price “shot”, but not in block but rather the free, financial or alternative exchange rates. Trying to play down the great leap forward of the “blue”, the current president of the Central Bank Miguel Pesce, reiterated that due to its size (1% of the market) was easy prey for eager speculators. The other legal alternative market, the “counted with liquidation” (CCL) arises from the purchase and sale of dollarized public securities that concentrates between 15% and 20% of daily transactions (around US$ 400 million as floor and up to US$600 million on peak days). His argument is that the only relevant dollar is the one for which it is exported and imported and that it is in an “equilibrium” value.
The question is updated when a divergence appears between the different values, preventing “one” price from being indicated for this very important good in a bi-monetary economy. Precisely these “alternative” types were the ones that escaped the most in a week full of resignations, rumors and names. Conclusion: widening of the exchange rate gap that once again exceeded 120% with the consequent devaluation expectations.
Own weight. For Sebastian MenescaldiAssociate Director of EcoGoalthough supply in this market is concentrated in a few companies (because of remittances), andIt is more volatile and presents more distortion than the official exchange rate, it ends up setting a price because it marks where the foreign exchange market would go if it were unified.
The official resistance to facilitating a jump in the exchange rate is due to the fear that an attempt is being made to put out a fire source with gasoline. From January 2021 to last June, inflation was 105% while the official exchange rate did not follow the train: 45%, generating a delay (only in that period) of 60%. Part of this phenomenon explains why, in a historical record of export liquidations, it was necessary to resort to the stocks on imports in order to generate the necessary cushion to pay for the purchases of gas and diesel necessary to not hinder the production process even more.
The pulls are various and range from “sending” tourism, purchases declared “expendable” or “luxury” consumer goods to the CCL in order not to supply “cheap” dollars, to segmenting the market for different uses, with the inequities that would arise and the operational difficulties that would appear in the short term.
Francis Gismondi, director of Empiria Consultants, the exchange rate gap generates tensions due to the uncertainty of whether prices follow the official rate or the free rate. “This is not rigid, it can change depending on the parameters and each type of goods. It was already discussed in 2015 when a unification with a 50% devaluation occurred, it ended up being transferred to the prices against the bet that had already incorporated the highest price”Explain.
The appearance of the stocks as a rule ends up restricting the supply of these goods and therefore raises their price, but that point is also reached when the importer must resort to the CCL to access the products and avoid that restriction. “The official exchange rate could be said to be delayed because it is below inflation, but what happens is that there is a structural deficit of confidence. Nobody wants to have pesos because of the history of corralitos, corralones, reprofiling and other scams with inflationary blows,” he maintains. Fernando MarengoChief Economist of Arriazu Macroanalysts and CEO of BlackTORO Global Investments. In his view, given the pressure to unify the market, the equilibrium exchange rate is quite subjective: it is not the same for each industry or even company. But devaluing Argentina, he insists, without an economic program and without credibility, is almost suicidal. “That does not mean that the Government can avoid a movement of the exchange rate, but doing it without reservations and without confidence is a bigger problem”he concludes.
Menu. In this context, the financial puzzle that the Government has to put together over and over again is to keep the variables as far as possible from their collapse. yesIf the interest rate still does not reach the inflation rate (as it has been happening for two years), but the alternative dollar does rise and the expectations of a stampede of prices and/or the dollar grow, inevitably the saver will acquire foreign currency or, failing that, it will anticipate consumption in goods linked to the dollar (cars, appliances, tickets abroad). It is not an efficient way to save, but it is affordable in its different formats.
The other, more sophisticated, is the growing importance of mutual funds that invest in dollarized public securities (to “link” them to the US bill) or to the projection of inflation (in this case, in bonds that adjust by the CER coefficient). Betting on a fixed rate is only attractive in the short term (30 or 60 days) but with the risk that the loss could be extended by a jump in the IPC.
On the other hand, for the large investor, the menu expands and corporate bonds appear (issued by companies with a guaranteed external market) that offer yields that are sometimes slightly negative in dollar terms. yesHowever, in this segment the trust factor wins: faced with the same return, they prefer the solvency of the exporting company to that of an indebted State, drowning financially and that has not yet resolved its internal disputes to support its roadmap. To the extent that they see that this pending issue is settled, the credit to the Government will be extended. Meanwhile, seeing is believing.
