2022 ended without the Government having to validate a discrete leap in the official exchange rate. As anticipated a year ago, the Central Bank “let” the official dollar run at almost the same rate of inflation over the past twelve months. Even if it has set more restrictions and introduced “exchange rates differential”such as the soybean dollar, the Qatari dollar or the special dollar for international tourists. Ultimately, all of this led to an implicit increase in the formal effective exchange rate despite the fact that the officer tracked inflation.
According to a calculation by the consulting firm Quantum, the dollar “cash” used to run the formal economy averages $19011% above the wholesale dollar, based on the year-end price of $176.
“Although the official reference exchange rate continues to be that of the single and free exchange market, the idea is emerging that the economy is starting to move behind a different, ‘effective’ exchange rate, higher than the official one”, explained the economists from the advice of former finance secretary and current adviser to the economy ministry on capital markets issues, Daniel Marx, “there continues to be a significant ‘gap’ between the official and free exchange rates,” they warned.
To reach this conclusion, the main changes in exchange rates that occurred between 30 September and 26 December last year were taken into account; and the level of impact on the economy of these “tailored dollars” has been analyzed as a function of the size of the operations they represent. “We define ‘cash’ for these purposes as that received or paid for by any entity or human entity, including any taxes or withholdings associated with the exchange transaction,” they explained in Quantum.
For instance, For total exports, an effective exchange rate of $191 was estimated, considering that 27% of exports are made with the value of the soybean dollar.close to 230 dollars, and 73% with the official dollar, which in the last weeks of December, the date on which the calculation was made, was around 176 dollars.
“Similarly, expenditures of the private sector financial account of the foreign exchange balance would be made at a cash dollar of $206 (differential given by the higher savings dollar rate) and the issuance of the tourist dollar at one of $236” , they explained to Quantum.
Thus, when looking at export and import sector averages, outflows from private sector financial accounts, including “savings dollar” purchases, and outflows from non-financial services current account, which includes tourism spending overseas, the formal economy’s “effective dollar” averages a minimum of $190.
“In fact, assuming that part of the imports begin to be made in cash with settlement, the “effective” exchange rate would be 195 dollars, 11% higher than the official one,” they explained.
“From the point of view of the static analysis and in relation to the end of September 2022, these adjustments have allowed the Government to accumulate reserves (not without charges) and add tax revenues. The dynamics imply the introduction of (temporary) changes that bring to an administration of its consequences, which have disparate effects on the operational parameters of the economy,” they said in Quantum.
Source: Clarin
