Merchants, supermarkets and banks have long been asking for the need for the government to issue a banknote of a higher denomination than the current and depressed one of $1,000.
The galloping inflation has eaten away the real value of the banknote with the image of the “hornero, national bird”, to the point that it is equivalent to $2.73 blue dollars ($366).
If the official forecast of 60% inflation for this year comes true, and assuming that the blue dollar also rises by 60%, they would reach $585 in December. of $1,000 would equal just $1.70, representing a further indicator of the decline of part of Argentina.
In the ideology of the technicians, and in an economy with very high inflation like Argentina’s, the acceptable level of the highest denomination note should be around 10 USD to reduce logistical problems (ticket wear, transfer and storage costs; plus printing and the need to frequently top up ATMs, etc.) but today all these costs are increasing.
For a long time the $5,000 bill is in the cat flap but the idea of politics that issuing it would be a tangible acknowledgment of high inflation has held him back. Will officials seriously believe that this way people don’t realize that inflation is high?
Now the $5,000 bill is gaining chances but, even if it were approved today, it couldn’t come out until the second half of the year when – this will happen – the new series of banknotes with images of heroes will begin to circulate.
The biggest news on the peso side is that the Central Bank has kept the benchmark interest rate at 75% per annum (6.2% per month) (and for fixed-term deposits up to $10 million) despite the fact that December inflation was 5.1%.
The government expected lower inflation (the minister Sergio Massa He said he could start with 4) and there are officials and economists who believe a 6.2% rate is high according to their expectations. But leaving it alone would also demonstrate that the dispute with the dollar is far from over.
More worrying estimates of the consequences of the drought for the current agricultural season emerge almost daily, and forecasts of the possible loss of dollars compared to last year exceed expectations. $14 billion.
The Central Bank calculates why, in addition to the volume loss, an excellent soybean campaign is expected in Brazil and Paraguay and, therefore,prices aim to stabilize.
The key question is how many dollars will be needed to import energy that required $12 billion last year. The government lights a candle on the fact that in June the pipeline of Dead cow to save the exchange year.
The Central Bank aims to cross the foreign exchange bridge until the arrival of soybeans with the 5,000 million dollars that the Bank of China would authorize, but market participants are alert to the possible financial impact of the government’s decision not to comply a sentence of justice and start a Political process of the Supreme Court of Justice.
The barrage of President Alberto Fernández, of Kirchnerism and even of the deputies who answer to Minister Sergio Massa against the highest Argentine court shows a government willing to go on the offensive against justice when a sentence disadvantages them even when it could fail.
The political impact of this barrier on economic expectations in the election year will test at least two things: the evolution of the foreign exchange market and Minister Massa’s good fortune to advance his gradualist strategy of bringing inflation down to 4% in April to advance his possible presidential candidacy.
In that summer context it might as well be producing a new soybean dollar for March-April.
Exporters who today receive a dollar of 180 dollars less withholdings (in some cases not reaching 130 dollars) are far from satisfied, even knowing that their bargaining power to obtain a new version of the soybean dollar (devaluation sectoral) may gain weight over the weeks.
AQ
Source: Clarin
