The president of JP Morgan’s Investment and Market Strategy group, Michael Cembalest, spoke about one of the main ideas that President Javier Milei has put at the forefront since the beginning of his election campaign, and gave a stark prediction: “Argentine Dollarization Will Fail If Implemented.”
In his report “Looking at market prospects in 2024”, the economist explains a number of reasons why, in his view, a plan with these characteristics would not work in Argentina.
First of all, for Cembalest, “Milei would need a two-thirds majority to approve the constitutional reforms necessary for the convertibility of the dollar.”
Second, “Argentina would need a significant amount of foreign exchange reserves and much higher savings rates” to attempt such a plan.
And, third, according to JP Morgan, “convertibility into another currency in general It is only viable in locations with a combination of the following elements: high levels of productivity, flexibility and entrepreneurial dynamism to allow the economy to absorb internal income and external shocks; receive loans from bodies such as the European Central Bank and the European Commission”.
For Michael Cembalest it would be failure “Argentina has none of these characteristicsand even if Milei tries, I doubt he can ‘de-Peronize’ the country enough.”
“Dollarization would give way to de-dollarization in a fairly short period”he concluded in this regard.
In the report, Cembalest analyzed various topics, from stocks, to fixed income and antitrust laws in the United States, he also wrote about the weight-loss drugs that were all the rage last year.
Additionally, it announced the “Top 10 Surprises for 2024.” Within that list, the person responsible for investment development and market insight at JP Morgan reviewed Milei’sdollarization plan.
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Source: Clarin
