For weeks the former ministers Martin Guzman Y Silvina Batakis they insisted on economic flat earthing: the dollar was not behind schedule and there were only speculative movements to force a devaluation. The same president of the Central Bank Miguel Pesce He also insisted and even wanted to show that it is not what it seemed. However, his entity continued to drain international reserves that not even the launch of the first version of the “soybean dollar” could successfully circumvent. The bet of the economic team to relaunch a differential and temporary exchange rate for a single segment of production (soybeans and derivatives) should show results: $5 billion in one month. But also maintaining the balance between not emptying the following months of liquidations, stopping the “demonstration effect” with the other producers and absorbing the wave of pesos that the BCRA will issue as a counterpart to the mega-liquidation of agrodollars.
Sergio did it. In August, the Economy Minister waged two races against time: the first was to have the green light for the appointment of his current vice president, Gabriel Rubinstein which, under the guise of an interdict by old tweets, was the installation of a more orthodox program than its predecessors and also speed up decisions before the drought of foreign exchange conspired against the economic recovery that had been observed since last year. The EMAE (estimator of activity and GDP projection prepared by INDEC) grew 7.5% in the second quarter of this year and although there are no data for July and August, the IERAL estimates through its own index that in the third quarter growth slows to 2.6%. Reasons? The retraction of consumption due to the effect of inflation and import restrictions that made it difficult and/or more expensive to supply the local production system.
The stocks went from being a punctual instrument to becoming the weapon available to stop the erosion of reserves with the increase in the price of energy and the peak of winter demand. The need to step on the “official” exchange rate was due to two factors: on the one hand, to use it as an inflationary “anchor” and, in addition, to guarantee a low outlay of the main import item: energy. During 2021 the dollar grew at an average rate of monthly inflation and that continued until June. Already since August, it has accelerated and has been adjusting at a monthly rate of 8%, somewhat more than the expected inflation: around 7% is the consensus of the estimates.
And now? For Massa, breaking the lock of the exchange rate policy implies opening a door behind which he will face renewed pressures that will come from three different directions: extend the window of time to continue liquidating products from the soybean complex at a differential price, add more products to the lucky basket and relieve the stocks given the amount of incoming dollars. For roman danteManager of Market Analysis at F&Othe question is whether the pace of good sales will continue when the prices offered by buyers go down. “The problem is that, by offering so much soy and by-products on the international market, the value of Argentine exports falls,” calculate. To graph it, it indicates that all the producer’s supply that could be made between now and the end of the year is being concentrated in one month, with the logical impact on the market from a price maker such as Argentina.
The bet on the future keeps, however, some doubts. The agribusiness consultant Paulina Lescano estimates that more products will want to be placed under the new soybean exchange umbrella. “Corn is the one that has sold the most so far, but in many cases sales decisions are not made because there is no destination to apply the sales weights. And in this case, whoever can choose between liquidating corn or soybeans with this condition, I think they will not hesitate and go for soybeans.”, he predicts.
He also notes that there is little wheat available, so he projects that whoever can choose will clearly prefer to sell soybeans under that decree.
Another aspect that stands out within the distortions generated by this measure in the marketing and production chain -in addition to the expected retraction in the supply of corn, especially affecting consumption (dairy farms, poultry, livestock, etc.), as much would happen with soybeans in areas where the producer used to sell at the same price (or similar) to consumers and export industries. In addition, he warns that being a temporary measure (at the macroeconomic level, difficult to sustain), in many cases, the producer has already made decisions about crops and surface. “Perhaps now it is more important that the rains arrive, to finish defining the area and technology to be applied in each crop.” anticipates.
green weights. Finally, the other threat in the face of a possible success of this encouragement for the exporter is that of flooding a market with pesos that flees from the currency in the face of an inflation that is already projected at 100% per year. For Camilo Tiscornia, a partner of C&T Asesores Economicos, if the committed US$5,000 million were purchased, it would imply an issue of $1 trillion instead of $700,000 million at the “regular” exchange rate. “In other words, they are going to have to issue and absorb $300,000 million more than they would have received if the new established price did not exist.”.
He also believes that there is a problem of liquidating at once instead of doing it over more months. “There is something more than an overtaking, it is a higher exchange rate, because this value would hardly have been reached gradually. And reading the decree makes it clear that they allow this with soy because it is not a relevant product in the family basket and it would not generate inflation. It is like consolidating the belief in the Argentine curse, that we export what we eat. In other words, they are trying to devalue the sector that gives them the dollars, but it would not cause inflation,” he explains.
The calculation made by Tiscornia is that the patrimonial loss faced by the Central Bank of buying at $200 the dollars it sells at $140, is compensated by the Treasury with a bond in dollars with which, at the end of the round, the Government will finish borrowing in dollars with the BCRAso that it can pay extra to exporters who, in turn, pay withholdings to the Government.
ill of abundance. The situation is different from that of June, when, faced with the evaporation of the few reserves, the internal market turned its back on the renewal of the Government’s internal debt. A limit that triggered the dilemma of a turn towards orthodoxy or towards the monetary abyss. Now, what the government will have to cushion is persistent inflation until the end of the mandate. Dollars may not be lacking, but many pesos will be left over if the success of this slow-motion devaluation accumulates reserves (and dollarized debt). An old and familiar dilemma.
