In 30 rounds since inception of $300/dollar soybean farm, currency deals have been reached $3,534 million70% of what the government expected, even if there are still three wheels to go at the end of the regime.
Towards the end of May, the car importerselectronics and Chinese parts and products (agrochemicals, fertilizers, etc.) are welcome because they were able to pay their commitments for the possibility of using the yuan equivalent of US$5,000 million.
On the other hand, the Central Bank has sent a very clear message to the oil industry: There will no longer be dollars available at the official price ($235) to pay for fuel imports.
Until last week the oil companies had a regime whereby dollars to pay for imported fuels were authorized within 24 or 48 hours. Now they will go for the free dollars.
In the last 14 working days, the Central Bank has managed to purchase US$ 600 million, but so far this year it has lost $2.6 billion.
In summary, there is no government supply of dollars capable of satisfying a demand that seems to have no limits. The containment dams of the foreign exchange market appear to be overflowing and the Government does not find convincing arguments to reverse the situation.
THE fixed-term interest rate of 97% per annum It is not enough to counter the unusual political situation that entails listening to Vice President Cristina Kirchner sharply criticize the IMF when, at the same time, her Economy Minister makes it known his hope that the organization will advance the disbursement of US$ 10,000 million in the first weeks of June.
With the figure that the net reserves of the Power Plant are in negative plan At around US$1.4 billion, it is very difficult to convince the market that currency hedging is unnecessary.
The latent strain on the exchange rate is increased by the electoral process a month before applications must be registered in a context of lack of trust.
Much the consumer confidence index as well as the confidence index in the government of the Di Tella University mark very low levelsdespite economic activity growing by 1.5% in the first quarter of the year.
Political distrust, spending the pesos you have as soon as possible to try to avoid them being devoured by inflation (it helps to support the level of consumption), generalized price increases and the expectation of a devaluation despite the government effort to avoid They have put together a delicate cocktail for these weeks.
The other side will try to define it Sergio Massa if you get an extra currency swap extension on your trip to China, that’s around $18.7 billion of which it is authorized to use US$5,000 million at 6.5% per annum to pay for imports from that country.
This possible expansion, as well as the decision not to allocate dollars to the official price to pay for fuel imports, would reduce demand, but doubts remain about supply.
The $300 soy/agro dollar is not enough to meet expectations e Central Bank raises devaluation rate to 7% in the month in which forecasts indicate a 9% increase in the cost of living.
The government continues to run behind the tension on exchange rates and the gap between dollars greater than 100% It would start to show that it is a floor, unless the possible arrival of funds from the IMF manages to calm things down.
Even if the government won’t just need dollars. A tweet by economist Fernando Marull, retweeted by former president Mauricio Macri, on Argentina’s payments to the IMF under the administration of Alberto Fernández and Cristina Kirchner presented a new approach based on exchange rate sensitivity.
He said that since the end of 2019, agriculture has liquidated $110,000 million, that net payments to the IMF have been $825 million, and that the central bank’s net reserve losses have reached $13,500 million.
One might read that, under certain circumstances, the weight of distrust may be greater than that of hard and fast dollars. And that the heaviest burden of paying the IMF the huge loan received from the previous government will fall on the next one.
Charles Arterburn is a seasoned business journalist for News Rebeat, where he provides comprehensive coverage of the latest trends and developments in the world of finance and economics.