History doesn’t repeat itself, but a photo of the 2022 exchange rate result can serve as a frame for understanding the trajectories of the dollar in the year that is starting.
Last year was sharply split in two due to exchange rate issues. A negative first half and a second half at the hands of the soy dollar (soybean 1 in September and soybean 2 in December) supported by a sectoral devaluation which gave the government fresh air thanks to the improvement in the Central Bank’s reserves.
A consultant’s report Quantum directed by Daniel Marx outlines an outcome for this year as follows: “Net trade supply of foreign currency will be lower in 2023 than in 2022 as the value of the agricultural campaign would be between 3,500 and 5,000 million dollars less“.
And concludes that: “although there would be a lower net import of energy, the IMF will receive net debt of approximately US$4.6 billion. The uncertainty generated by the electoral process and the persistence of the exchange rate gap at levels of 90/95% are further factors that will influence reserve accumulation dynamics this year”.
In other words, the Quantum report makes it clear that the government will once again run out of foreign currency, which solidifies the scheme of trapping the dollar and imports in what constitutes one of the most delicate legacies which the government that will take office at the end of the year will receive.
Minister’s collaborators Sergio MassaFor their part, they point to the arrival of dollars linked to investments and underline that both the tender for the spectrum for 5G mobile telephony (the government speculates it could reach 1.4 billion dollars) and the laundering of money used to finance imports and construction will be decisive in the result of the trade balance for the year.
Massa insists he will not devalue (would a devaluation reduce his chances of being the Frente de Todos presidential candidate?) and ratifies the idea of keeping the rising official exchange rate below inflation as a way to align it with the “4% Inflation Plan for April”.
To carry the increase in the cost of living at 4% per month aiming for 60% per year marks the cable car that Economy outlines and in which the 28% increase in the gas tariff for the wealthiest consumers is recorded throughout the current year.
Try to lower the inflationary foam in the first couple months to deal with March always difficult in terms of prices – due to the end of holidays, the start of classes and the entire working year – he will ask the government to renew the possibility of obtaining dollars until the arrival of foreign currency from corn and soybean exports. But this year there will be two important differences.
One of these is that the exchange rate gap between 90% and 100% continues to demonstrate the backwardness of the official dollar (25?) and to consolidate the idea that obtaining a dollar to import or pay abroad $179 is a “gift” for most of the companies which, given the uncertainty about the future exchange rate, set their selling prices on the basis of a free dollar of around 330 dollars.
The possibility of eliminating stocks is not estimated by the economy in any scenario, even if it will be necessary to prepare for movements in economic variables based on the expectations that the presidential elections and the assumption of a new government at the end of the year may generate.
An example can be seen in the 31% rise in the share price of Argentine companies in the last 16 days.
Were the prices of those newspapers far behind? Certainly yes, and in most cases earnings did not match market valuations, presumably because the negative political environment left no room for recovery.
So have you started a decisive path to improve Argentine assets? Impossible to know and less when the government is waging a head-on fight against the Supreme Court of Justice of unpredictable scope.
Source: Clarin
