Coverage, the key to economic decisions between now and the elections

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The theme formed the backdrop for Thursday’s IDEA CEO meeting, where some of Argentina’s top executives took a catharsis in the face of the economic moment.

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The process of coverage due to the uncertainty that the 2023 election presents and the inflationary crisis that has played out since mid-2022 – that’s what it was all about – has stained all opinion.

Doubts about future access possibilities dollars to be able to import have been confused with those of insurance companies addressing fears that the Central Bank does not issue foreign currency for the payment of reinsurance abroad and with criticism of one of the latest AFIP resolutions making imports more expensive.

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On the progress of public work businessmen recognized that the minister Sergio Massa is advancing payments in exchange for expedited progress and completion before Augustdate of internal elections.

The bankers have recognized this dollar deposits are losingbut within normal limits for a pre-election period, and pointed out that the peso segment is blocked by the Central Bank by forcibly paying a monthly rate of 6.5% for cash bills.

There was a complaint from the automakers about the lack of imported parts and the positive messages were borne by the representatives of the cement for public works (private ones are decreasing), for managers of the energy sector (oil and gas are going from strength to strength) and for the iron and steel industry for the advancement of the gas pipeline in Dead cow.

The hedging process that companies attempt when faced with a shortage of dollars at the official price ($215) matches that of the general population faced with the inflationary leap unleashed eight months ago and that there are no retaining dams.

The blue dollar hits $400 It was a sign in the week of possible coverage as bets open on what level of currency regulation will cause the new $300 farm dollar to boost export regulation.

At the meeting of the Entrepreneurial Development Institute of Argentina, economist Dante Sica calculated that they will liquidate $5,000 Million for Soybean Sales and $4,000 Million for Rest of Products Liquidation. The amount would be significant.

Among the more relevant concerns for this year is whether or not the government will have enough dollars to meet all external commitments through the end of the year, assuming that the loss of exports due to the drought would exceed 15,000 million dollars over the previous year amount exported in the previous campaign.

Quantum, Daniel Marx’s consulting firm, claims in its latest report that “estimated needs amount to $28.8 billion.”

The government would be short of 7,200 million dollarswhich should be “the result of a greater flow generated by this new edition of the differential exchange rate (agricultural dollar), due to a greater restriction in the access to official dollars to pay for imports and other foreign obligations and new disbursements from international organizations”.

Thus, the possibility of balancing exchange rate needs depends on Minister Sergio Massa obtaining more funds from international organizations (there have already been announcements), closing plus the blocking of imports and that the agricultural dollar gives a result within the framework proposed by Sica. But, moreover, that the result of these efforts will respond in the first half of the year.

The second part of 2023 economically will depend on the expectations raised by the arrival of a new government and this could play in favor of regenerating part of the confidence lost due to the new regime aiming for 100% inflation and losses due to drought.

In this sense, experts who follow global consumption have begun to point out that the flight of money could favor consumption selling dollar substitutes such as household appliances, automobiles or motorcycles. Naturally, to finalize the purchase there should be products to sell and, in many of the articles, the scarcity begins to make itself felt more intensely.

Source: Clarin

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