Due to the decline in reserves, the rumor of an evolution of the exchange rate is growing, even if the Economy denies it

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The fragility of reserves has given rise to rumors of a doubling of the exchange rate in the market, a way to grant a higher exchange rate to foreign trade that does not imply a devaluation of the official dollar whose jump is transferred to the rest of the prices in the economy. In Economics, for now, They deny that this option is being evaluated.

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The dynamics of the sale of reserves for this beginning of the year has not been seen since the creation of the “Single and Free Foreign Exchange Market” (MULC) at the beginning of 2002. Since January, The agency has already sold 2,000 million dollars for interventions in this market alone.

The drought, the advance of agricultural settlements in the last month of 2022 in the context of the soybean dollar and a demand that, despite import stocks, does not subside, mean that, far from normalizing, the situation worsened in March drastically. The Central Bank has already sold $1.3 trillion this monthmaking it the worst March since currency controls were put in place.

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The possibility of the foreign exchange market unfolding is an issue that was already on the economic team’s agenda with the arrival of Sergio Massa at the Palacio de Hacienda, but which had been rejected as one of the possible alternatives by they do not have the support of the International Monetary Fund.

However, the IMF’s latest statement regarding the agreement to “make more flexible” the reserve target set with the government, hinted that it could ease its requirements on this front as well. In particular, the agency said: “Efforts will continue to ensure external competitiveness and strengthen the coverage of reserves, which the authorities intend to complement through the timely rationalization of the exchange rate policy“.

The option rallied over the weekend and even economists close to the government relaunched it as a viable short-term alternative. Despite this, the Ministry of the Economy has denied working in this direction.

Below, they warned it the rumors come from presidential adviser, former Syngenta CEO Antonio Aracre, that before his arrival in the civil service he had already declared on several occasions his intention to divide the foreign exchange market and somehow manage to unify the different prices that exist in the economy.

The economist close to the government, Emmanuel Alvarez Agis, said in a weekly report from his consultancy PXQ that the evolution of the exchange rate “is not a solution to the drought”.

However, he warned: “Impossible to neutralize the impact of the drought by an alternative inflow of foreign exchange (if the agreement with the IMF remains within the limits announced last week), the risk of an exchange rate unfolding increases as the option for a devaluation has already been ruled out by the current minister who has just taken office”.

For his adviser, the impact of drought, the level of inflation and the election year are factors that do a possible leap in the dollar quickly translates into prices. And they warned that while there is no “official data” to analyze this scenario,”the preferences of the current economic management for “tailored suits” lead us to evaluate the option of splitting up“.

Daniel Marx, adviser to Sergio Massa, agrees that an exchange rate split is not a fundamental solution. In radio statements, the founder of Quantum Valores, said: “If implemented, it is a mechanism that would be a transitional exchange rate split. It does not prevent there being two prices for the same thing”-

“Today the difference between the two prices is considerable and it is better to channel some operations through a market that tends to unify over time. The key lies precisely in the passage: How do you go about closing that gap and reaching just one dollar?“.


Source: Clarin

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