“If I had 15 billion dollars, I would open the stock today” the president assured Javier Milei, announcing on the radio that he is negotiating new disbursements from the Monetary Fund and credits from private investment funds and other countries.
The 15 billion dollars appear as a magic figure for the Government already at the moment of the nomination of the President Luis Caputo as a minister, when he should have stood for office with that sum under his arm.
The presidential announcement, the day after the Senate rejected the DNU which deregulates economic activity, marks the beginning of a new phase after 10 days of management characterized by positive results in financial matters, but negative in terms of economic activity and employment. When might they cross paths?
During the week the issue became relevant due to Caputo’s decision to open the import of some foods to control prices on the domestic market.
Opening up imports involves the use of dollars and the government no longer has any, not even through the Central Bank bought 10,000 million dollars. Net reserves remain negative and import payment restrictions generate significant foreign currency debt.
“There are almost still some 40 billion dollars of commercial debt after the placement of the Bopreal bond,” according to a report by economist Carlos Pérez.
Milei framed the further search for dollars in the need to raise stocks to move towards a scheme of currency competition which in his vision could be given to half a year.
At the political setback of refusal of the DNU In the Senate the answer is the announcement of a path towards greater dollarization of the economy. And the dollar doesn’t react?
The calm of exchange rates contrasts with the political effervescence and the divergence with the IMF, virtual lender of last resort, which asks it for political sustainability and to accumulate 10 billion dollars in reserves by the end of the year.
One of the aspects of the current financial market is the lack of pesos compared to the amount of dollars offered.
According to the latest Abeceb report “today the ratio between M3 (indicator of broad money) and GDP is at historic lows and loanable funds are largely absorbed by the public sector. The purchase of reserves is a real way to monetise the economy “.
Fewer pesos in circulation ea “blackening” of the retail payment system which is advancing with intensity.
While Caputo discusses with supermarkets to change the promotion system (2X1; 50% discount on the second unit, etc.), the discounts of 5% for bank transfer or 10% for cash payment or 21% without receipt on materials for construction lead to illuminate the new phase of consumption.
The companies that had at the end of the year accumulated stocks and had valued them at the highest price they thought possible, now they are preparing to dismantle them and discounts go hand in hand with a certain evasion.
The recession due to the decline in sales is marked and price increases are easing.
In the first week of March, in the EcoGo measurement, retail prices increased by 3.1%, a notable decrease compared to the same period of the previous month, projected by 13.5% as an increase in the cost of living and with a striking figure.
This month, for the first time in a long time, there could be a decrease in wholesale prices as a result of the dismantling of inventories due to the sharp decline in sales.
To the settling of the political dispute on the future of DNU deregulation, we must add the definition of the government’s change scheme in the coming weeks.
The minister insists that we must not wait a jump of the dollar, But the 2% monthly increase forecast by the official appears insufficient to convince a part of the market that believes the wholesaler’s $851 is not enough to encourage the rapid liquidation of corn and soybean exports.
Meanwhile, Caputo’s move to lower the key economic rate from 100% to 80% and to promote a decline in the rate on fixed-term deposits leaves savers with fewer alternatives to protect themselves from inflation and a strong doubt is whether they will succeed to beat the dollar rate in the coming weeks.
Source: Clarin
