The problem for the government is no longer just the lack of dollars but also how to get the pesos

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The government continues to cling to the idea that a central problem in Argentina is the structural lack of dollars and riding on that idea, he applied stock after stock so that foreign currency doesn’t escape.

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The Economist Ricardo Arriazu He insisted that, in fact, there is no structural shortage, but rather that the state is short of dollars.

It is quite clear – and even more so after the second round of soy dollar, which established a $230 dollar for grain exporters – that an exporter would hardly feel tempted to sell any product at $168 from the wholesaler when the government has already shown signs of acknowledging a higher exchange rate.

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Both stocks holding back the official dollar (economist Víctor Becker calculates that the real exchange rate in October it was the second lowest since mid-2018, after last May), as restrictions on import payments and the uncertainty that the regime itself generates led to a new soybean dollar with a warm start regarding the settlement of operations.

The tug of war between producers and exporters on who gets the most benefit from the $230 dollar marked the tepidness in the first days of validity of a scheme valid until December 31st.

Curiously, disputes on the dollar side attract less attention these days than on the peso side, where the government faces a “broken market”. In other words, the Treasury has no one willing to lend it money under current conditions.

The shortening of the terms of financing has become a serious problem for the Treasury. Suffice it to recall that last year the Treasury was able to place bonds a 17 month term while in early 2022 that refinance was reduced to 8 months and is now just two months.

And that result is obtained (in the last tender it covered just 84% of the deadline) with the offer Supplements on CER-indexed bonds (inflation) and dual bonds also linked to the change in the official dollar.

In numbers, bonds maturing next year offer 3 or 4 points above inflation and those maturing in 2024 pay up to 12 points, but they do not find investors with appetite.

With this framework and in the last month of the year, the Treasury needs one trillion pesos A part would come from the issue made by the Central to buy soy dollars, but it won’t be enough.

The underlying problem is the decrease in the demand for money and the downturn in the weight market. A report from the consultancy Quantum highlights that “this limits the financing possibilities. The Treasury remains the most dynamic player in that smaller market, partially replacing the private sector.”

The issue was present at a meeting of the Association of Banks of Argentina. President, Claudius Caesariushe highlighted: “Deposits grow by 2/3 parts more than credits. There is no request for credit, either from businesses or from households, and this is the product of high liquidity, which companies also have, and a lack of trust”.

And he concluded: The few lines (of credit) that are taken are the facilitated ones, i.e. below inflation. The lack of trust logically translates into entrepreneurs who do not invest and families who do not get into debt in the face of fear of a change in their economic situation”.

Even bankers experience the particular situation of having to lend to a state which is doubted the money they take from savers given the low private sector demand for credit.

All defensive seems to be the watchword. The Economy Minister applies a new leap in the dollar to favor soybean settlements, the Central Bank absorbs the greatest possible amount of pesos to prevent individuals, companies and individuals from going to the dollar avoid getting into debt for fear of the future.

In this context, the banks take fixed-term pesos from individuals at 75% per annum to pass those funds to the Central also at 75% per annum in the case of liquidity promissory notes, Leliq.

Both the Massa treasury and private individuals are looking for him take cover in a context of considerable uncertainty.

Meanwhile, the government lets it be known that it would seek the blue dollar, which is at 311 dollars, to drop to 290 dollars at the end of the year in an alleged attempt to blow up those who continue to bet on an exchange rate which, in the head of many price setters, already happened.

Source: Clarin

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