After returning from Washington a day later than expected, Sergio Massa Launch talks resumed immediately on WednesdayIt’s a new dollar for the field. The Minister of Economy has obtained the endorsement of the Fund in the United States to move forward on this measure. The goal is to stop the uninterrupted draining of reserves and keep afloat the emergency economic scheme agreed with the organization in view of an election year.
It is a new round of drop-in devaluations through the implementation of differential exchange rates and the tightening of import restrictions, all with the aim of avoid a sudden devaluation or exchange rate evolution. In this context, Massa’s team has been struggling in the last few hours with exporters, with whom there are still differences on the deadline and on the new dollar, which could reach 300 dollars.
During the tour in Washington, which made it possible to unblock an outlay of US$5.4 billion and easing the reserve target with the IMFMassa announced the launch in April of a new 30-day soybean dollar and another 90-day regional soybean dollar. The idea was to launch it tomorrow, but it was postponed to Wednesday. “The economic team is adjusting the details with the different agricultural sectors,” they told the economy ministry.
The economic cabinet would meet this Monday evening to advance the definitions. Mass it seeks to export US$15,000 million between April and September, an ambitious goal whereas soybeans 1 and 2 contributed $11.7 billion. The industry estimates that the liquidation could reach $5 billion in soybean and regional economies, and add $15 billion in grains and oilseeds throughout the year due to the drought.
With the grain market paralyzed awaiting the official announcement, businessmen are making long-term offers and the exchange rate”as high as possible”, i.e. greater than $300. “We’ll see tomorrow,” they said in the industry. Massa’s team had considered abandoning the 3 dollar soybean if they got enough funds in the US, but the idea was scrapped due to the dubious promise of the arrival of 3,000 million dollars from international organizations.
Massa urgently needs to launch a new “incentive” for exporters. The loss of reserves continued last week due to provincial debt payments, energy imports and private demand. The Central Bank closed like this March with a loss of US$1,900 million in the official foreign exchange market and sales of US$ 3,000 million in the year, while net reserves dropped $7 billion in three months, according to Ecolatina.
Now, success will depend on whether the benefit granted convinces producers to sell the 6 million tonnes that remain unmarketed from last season, as newly harvested soybeans are out of condition, according to specialists. The 1 soy dollar was $200 in September and the second release in December was $230. When adjusted for inflation, the new transitional regime would be about $300, according to Salvador Vitelli.
However, the measures would not be enough to plug the exchange rate hole, aggravated by the drought. “Neither ‘soy dollars’ nor this new ‘agriculture dollar’ create dollars. They can expedite a currency settlement delayed by expectations of a better future exchange rate, but at the same time they anticipate future settlements. This negligible flow of settlements in the first quarter is a consequence of the previous soybean dollars,” Invecq said.
With these adjustments, the Government is trying to keep the official dollar smooth and to contain the exchange rate gap, which has started to rise again in recent days thanks to financial dollars. Analysts also expect tighter restrictions on access to foreign currency, something that began to materialize last week with the incorporation of taxes on imports of goods and the extension of the deadline for obtaining permits to import services.
The latest initiative was known while Massa was negotiating in the United States at future “unification” of the dollar for tourism, concerts and some imports.
Source: Clarin
