When making projections about the dollar, that great thermometer for decision-making, saying that it is “quiet” implies accepting that it is falling in price between 6% and 7% each month. Worse still: if the peak reached in the unique departure of Batakis from the Ministry of Economy is considered, with less than a month in office, its updated value would be $430, according to the economist’s calculations. Esteban Domecqdirector of Invecq.
Numerology. This figure did not reach, however, the other peak in October 2020, when the monetary tsunami and a stocks that were not yet so strict left the dollar at $570 (always at November 2022 values). On that occasion, despite the fact that the “blue” or its legal cousins, the cash with settlement (CCL) or the “stock market” (MEP) are marginal, it forced a 180-degree turn in monetary policy, beginning operations of bonds and internal indebtedness (in dollars and pesos) that should converge with lower financing needs by the Treasury so as not to swell the snowball of the stock of debt papers.
For Eduardo Fracchiadirector of the Department of Economics of the IAE, the situation is already complicated since this government began. The “little summer” has more to do with a quiet dollar and a certain orthodoxy for controlling the fiscal deficit to try to control inflation. “I’m not that scary, but the situation could become more tense by combining the shortage of dollars, movement of the blue, acceleration of inflation, some friendly fire from within the coalition or another social problem. Anything can happen with such a vulnerable position”, he concluded.
The question of the moment is, precisely, whether the relative balance can be sustained. Actually, a trick question: no one could sign that with inflation of 6% per month (100% annualized), the dollar will remain static.
For this, the first indicator they look at is the stock of reserves: not the “totals” published by the Central Bank in which it does not net liabilities and combines values, but the “net” ones. According to the calculation of the consultant EcoGoCurrently, net international reserves are located at US$3.038 millions, a figure that, while not high, shows a recovered level when compared to the worst moments in June (which could even be measured as negative) when the crisis seemed to escalate to infinity. However, the data that triggers the alerts is the continuous drain on reserves that the Central Bank has been showing: accumulate a fall of US$1,884 million in the month of November. Will he be able to stay calm if they keep losing with this intensity?
traps. The temptation to answer this question quickly is the self-censorship that exists in the Government with the word “devaluation”. Precisely, one of the first recommendations made by the technical team of the International Monetary Fund was not to use the (official) exchange rate as an inflationary anchor. In other words, let it follow the path of the CPI and not continue to fall in real terms. The exchange rate gap is a true reflection of this dynamic: when it was getting smaller it was when the financial dollar was quiet for a long time while the “official” one continued to grow. But from 165% that it touched, it later dropped to 90% (measured on the commercial dollar). The immediate correction could be that of devaluation, which would simultaneously attack several sides: it would promote a laundering of exports that today take time or escape through the informal channel, and it would discourage imports, many of which were brought forward anticipating the end of the ” cheap dollar”. An equation that in the near term could bring calm to a market in permanent tension.
But also, a devaluation makes two things more expensive that today continue to be governed by the official exchange rate: food and the financial burdens of companies. The latest CPI figures show that, in the third quarter of the year, the basic food basket rose almost 3 points more than the general index. In addition, for the external debts of companies, which are being refinanced to the extent possible, it is different to count them at $160 than almost double. Or energy imports, which are still dominating imports and forcing the rest of the products to be placed in a virtual stocks or seriously evaluate directly, the possibility of not asking for more official dollars to pay for imports and go to the MEP. Although more expensive, it is always better than stopping production due to lack of inputs and losing markets that are difficult to reconquer later.
in focus. Almost like a curse, 2023 carries the restrictions of every odd year: it is electoral and in this one in particular, the lack of freedom of movement for the economic team is aggravated, which is inhibited from substantially correcting the exchange rate by those who looked indulgently the deliberate delay that occurred for two years. Sebastian Menescaldi, associate director of EcoGo projects that “in principle we arrived without devaluing, but we are going to have rises and falls during all this time.”
Two three factors will play a role in next year’s electoral calendar: control of the exchange market (to avoid a sudden devaluation and a greater acceleration in the price of food), a pax inflationaria (Massa declares himself satisfied with a CPI in the order of 4% annual for March) and a non-deterioration of the income of retirees and employees. Achieving this in the middle of the electoral campaign may not add wills, but surely it will not subtract. The key is how to achieve it without going to a new version of the 2021 “Platita plan” that cost so much to finance during the first half of this year, with the results in sight. As the latest EcoGo weekly report underlines, what is relevant is not only knowing what happens with the values within the range of “Fair Prices” (1,700 products) but also with the other top 100 companies in the country that agreed not to exceed the limit. of 4% monthly for another 30,000 goods… in exchange for being able to access the “Single and free exchange market” MULC). Dollars for all…. even if they don’t reach
Income. The average retirement income, for example, is running behind inflation because the CPI has been accelerating throughout this year. The same occurs with wages, although the impact is highly variable depending on the type of readjustment agreement reached and when it was entered into. For this emergency, the official formula will oscillate between a fixed-sum increase (the “bonus for private individuals”) and an emergency recomposition of the vital and mobile minimum, always below the inflationary rate.
Finally, the other variable to monitor will be the volume of public debt in pesos and the interest rate necessary to continue “rolling” that mountain of dancing pesos. As any other innovation such as the “soybean dollar” emerges to obtain the necessary dollars to avoid paralyzing production, release pesos to the market, it will be necessary to resort once again to the only financing channel available to the State in order not to continue printing tickets that, starting next year, will be able to banish the native animals and put back the heroes of the national pantheon. Of course, with the same denominations as today (the highest value is equivalent to US$ 3 “blue”) because nominality continues to make decision-making dizzy.
