By limiting the purchase of dollars to wholesalers, the government is now trying contain the price of the currencywhich in the last month accumulates a increase from 21%, which once again disrupts the entire price structure of the economy.
The new measure, released over the long weekend, prohibited the purchase of dollars on the exchange with pesos obtained from a bond guarantee.
Therefore, try to contain the demand for foreign exchange from wholesale buyers who they leveraged buying Mep dollars (Stock Exchange) or cash with liquidation and favoring the rise in prices.
On the first trading day, the outcome of the measure it was a draw: The Mep dollar fell -1.7% to close at $428, but liquidity with liquidation rose 1.60% to close at $460 and blue continued long up to $474.
It was the first day in trying to hold free dollars and reduce the gap with the wholesaler, which closed at 104%, a high level despite the fact that the Central Bank accelerates the growth rate of the officer in a career that it is losing against inflation.
Attempting to contain the price is part of the range of measures that Minister Sergio Massa is attempting (his possible presidential candidacy is at stake) in an intense race for dollars.
The net reserves of the Central Bank are less than 1 billion US dollars, and the market does the math after several days when the foreign exchange wheel ends in a negative balance.
On the first day of operations in May, Central had to do it sell another $133 million in a context in which coverage expectations are consolidating.
Future trading volume in dollars was up about $2 billion last month, reaching, according to Fundación Capital, US$ 4,979 against US$ 2,973 million on average in the first quarter.
More trades to close a future dollar price and a 10-point hike in the benchmark rate (to 91% annually, 7.5% monthly) that aims to lag behind the inflation data due on the 12th may e it could reach 8%.
Faced with this scenario, the key question in the coming days is How the search for US$10,000 million is evolving by Sergio Massa.
Negotiations for an advance of US$ 10,000 million by the IMF appear to have cold in recent days, despite the body I wouldn’t pretend an additional devaluation to that which the Central is operating, but the achievement of the tax objective that establishes it the deficit drops this year to 1.9% of GDP.
Although the agreement between Cristina Kirchner and Sergio Massa effects a major liquefaction of public spending through 100% inflation that reduces the purchasing power of pensions and salaries, the deficit target appears compromised.
A report by Quantum, Daniel Marx’s consulting firm, argues that the drought will affect the supply of foreign exchange despite the $300 farm (so far with little effect) and also the harvest.
and also wait possible spending increases related to the “social security moratorium and the electoral cycle, which can be offset by lower energy imports and reductions in subsidies”. But compliance with the primary deficit of 1.9% of GDP will be a challenge.
That’s why the economic team advanced with the ability to use the equivalent to 5,000 million US dollars of trade from China to pay for imports from that country, especially electronics, chemicals and fertilizers.
The commitment to save dollars to cover imports continues with negotiations with Brazil for payments of parts and finished units of the automotive industry.
But not only the payment of imports is at stake in the negotiation. The government hopes that Brazilian President Luiz Inacio “Lula” Da Silva articulate a loan from the BRICS in what would imply a delicate geopolitical move.
Argentina is close to the BRICS (Brazil, Russia, India, China and South Africa) and the search for 10 billion dollars is very tempting.
But the United States, the IMF’s largest shareholder, he is also attentive.
Juan Gonzalez, advisor to President Joe Biden for Latin America, issued a warning on the matter “China’s Influence on Critical Minerals”.
Gonzalez argued that China is not just “resource extraction, but by forging cooperation with Chile, Argentina and Bolivia”.
The government appears to need $10 billion in its bid to reach year-end elections with some exchange rate stability. In the midst of the geopolitical dispute between the United States and China, aspires to get funding from anywhere.
What will be the guarantees? that are negotiated either way to get borrowed dollars in a world with less funding and high uncertainty?
Source: Clarin
