In announcing the three dollars of soybeans, Sergio Massa said it will serve to “strengthen reserves and continue on the path of stabilization” amid a drought that will cut exports by at least 20 billion dollars and leave reserves Central Bank in critical condition.
The stated goal is obtain an export clearance of US $15,000 million. But that seems like an overly ambitious goal: Soybean Dollar 1 and Soybean Dollar 2 contributed $11 billion between the two, before the effect of the drought took its toll on exports.
“He is too optimistic. There is no clarity on this calculation, but historically, even if the exchange rate is at a higher level, that increase in exports is not achieved in the short term. I doubt that the soybean 3 dollar is an aid that allows to bring oxygen to the situation of reserves. It will barely be able to provide a flow so the business doesn’t continue to decline due to lower dollar income due to the drought,” says Guido Lorenzo, director of consulting firm LCG.
For the economist Martin Vauthier “with the current exchange program and without a stabilization regime, these special dollars are the only chance that the Central Bank has of not losing reserves in the short term”.
But he points out that this does not solve the underlying problem. «They are financial measures which imply an advance of the harvest or the removal of a previous stock, but not an increase in exports. And also with a high cost for the Central Bank. which then sells, this patrimonial loss translates into a greater monetary issue, with repercussions on inflation and the exchange rate differential”.
From Equilibra, Lorenzo Sigaut Gravina underlines that “the net reserves are at very low levels, we estimate it the first quarter closed with a loss of US$ 5,300 million in net reserves“.
Since soybean 3 dollar won’t solve the underlying problems, for economists later in the menu there are further restrictions on imports.
“We are not ruling it out in the future moving forward with more restrictions on paying private debt or even progress on less dollars being available for tourismLorenzo underlines.
From IERAL Jorge Vasconcelos claims that “there will be months in which the adjustment to imports compared to last year will be 50%. they will continue to ration the dollar and the adjustment variable ends up being the level of activity”.
Vasconcelos specifies that the monthly request for import authorizations (SIRA system) is 7,000 million dollars a month. “Between now and October, including energy imports, they could authorize a maximum of $3.8 billion.”.
Thus, the IERAL economist underlines it “3 soybean dollar has no power to narrow the exchange rate gap nor to reverse the recessionary trend imposed by import restrictions”.
“The soybean dollar will not reach 3. In the short term it will be needed to overcome the quarter, but the situation will continue to be very complicated. Due to the restrictions on imports -80% are inputs and capital goods for production- there was a drop in activity of between 4 and 5 points of GDP“, says Agustín Etchebarne, director of the Freedom and Progress Foundation.
“Everything speaks of an urgent situation. We believe further rationing of currencies will take place. Either they tighten inventory more or they don’t enable MULC for consumer goods or tourism. Throughout the month of March, the loss of foreign exchange due to the drought was excruciating,” notes Sigaut Gravina.
Etchebarne adds another element that makes noise on the market and complicates the chances of recovery. “This last slap of drowning that he made with ANSeS and with the Sustainability Guarantee Fund to force the sale of securities at twenty-five cents generates a situation of momentary relief, but at the same timez makes a lot of noise because people are wondering what the next choking slap is. No one can be sure that others will not affect their interests.”
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Source: Clarin
