The arrival of the a third round of the “soy dollar” This month, the introduction of the agricultural dollar in May and new loans from international organizations will try to stem the dramatic reserve situation, after the Central Bank closed the worst first quarter of the year in terms of dollar accumulation.
On the market they believe that Sergio Massa it will be able to “gain time” and “get through the winter” without devaluing itselfbut they warn that this will come at the expense of higher inventories and growing fragility, and that after STEP the strain on exchange rates will once again increase in volume.
“The government maintains the policy of”devalue without devaluing” delve into the pattern of differential exchange rates and therefore “navigating the acute shortage of foreign exchange”they said in Delphos. at the same time they added: “However, the upward impact on domestic prices of this type of measure is almost inevitable as it spans an ever-increasing number of products.”
The option of a more expensive dollar for some sectors could have an impact on the price level and, in turn, economists fear that it could have a recessionary side, in a context in which the dollar’s losses due to the drought seem irreparable. “After the first quarter, we lowered our projections for a decline in activity to 3% for this year with a particularly recessionary second and third quarter,” they stressed in Delphos.
While trying to encourage the supply of dollars, the government could further regulate the demand for foreign exchange. “Perhaps the differential dollar cannot bring relief to compensate for lower dollar income due to lower agricultural exports. Further measures are planned on restricting access to foreign exchange. Mainly we consider it feasible that access to the dollar is restricted even more for the payment of private debt and emissive tourism,” they warned in the LCG advisory.
For FM y Asociados economist Fernando Marull, the idea of a dollar of soybeans was inevitable. And, despite this kind of “dollar differential”, we can expect more exchange and more controls: “The drought, and the fall of the $24,000 million of agricultural income is compensated with less energy, less tourism, more control SIRA and import debt. And of course with declining reserves.”
“Now begins the high seasonality of the 2023 crop. From April, May, June, up to PASO we could see a more stable reserve scenario, which would become more complicated after the primaries. For the soybean dollar, we will see a larger increase in reserves in April, if the manufacturer is convinced.Obviously if there are more in April, there will be fewer liquidations in the coming months”Marul remarked.
In this way, these “shortcuts” that the government adopts to not validate a discrete leap in the official exchange rate fail to ease the pressure on the foreign exchange market until the end of the year. “The government will do everything possible not to devalue in 2023 and it can succeed, only that in the meantime it will adopt measures that will make the need to advance on this front ever more evident”, warned the Lcg.
For his part, Juan Pablo Albornoz, of Inveq, said: “This management does everything possible for failing to validate a discrete jump in the official exchange rate. If that means paying exporters a higher price and continuing to subsidize importers on the A3500, they will continue to do so. This takes away from the attractiveness of very short-term dollar-linked hedges.”
The economist warned: “The issuance associated with this operation of buy high and sell low (basically paying the monetary costs of a devaluation without devaluing as seen in previous soybean dollars) that could impact the gap.”
Source: Clarin
