Last December, when this management began, market operators expected the dollarthe official and the alternatives, it would move at a faster speed. One hundred days later, the devaluation expectations Their limitation went hand in hand with the reduction of the exchange rate gap.
The evolution of future dollar It’s an example of how expectations have been scaled back. In December the future dollar in April was at $1,200 and today it is at $891. In September it went from trading at $1,650 three months ago to closing at $1,164 last Wednesday.
So far this year, the official dollar is up 6.1%, the cash dollar is up 11% and the blue dollar is down 1%. The request has been resolved and since the change of government, The Central Bank managed to purchase 11,147 million dollars and rebuild reserves, with imports still trampled by the dollar access plan and by the effect of the recession on consumption.
During this period, the government applied a blender and chainsaw combination that allowed it to show a fiscal surplus in January and February. This gave space to Santiago Bausili and Luis Caputo correct the creeping picket to maintain the rhythm of the changes, at the promised 2% monthly. Last week, President Javier Milei confirmed that this rate of devaluation will continue.
For the MAP consultancy company, “the result of the joint action of the Ministry of Economy and the Central Bank was generated less pressure on the exchange market and has contributed to realigning, at least in the short term, the expectations of economic operators and investors. “The currency gap has narrowed from average levels of 40% in January to around 15%/20% so far in March.”
Despite the slowdown in inflation and the flattening of the future dollar curve, analysts warn that the exchange rate situation is not yet under control.
For Portfolio Personal Inversions (PPI), “although fiscal work was very good in the first two months of the year, this was largely due to liquefaction in terms of pensions and pensions, cuts in transfers to provinces and delays in payments in Cammesa. The current administration should continue with sustainable reserve generation“, normalization of the foreign exchange market and normalization of short-term maturities for the rally to continue.”
Nonetheless, one of the issues the government continues to have outstanding is that, despite the Central Bank’s heavy purchases amid the liquidation of foreign currencies from the countryside, reserves are still in the red. Over this period, net reserves have gone from -from 10,889 million US dollars to -5,543 million US dollars.
“The difference between the accumulation of reserves and the monetary authority’s net purchases is explained by the issuance of BOPREAL (the bond with which the government settles the debt with importers), the payment of Global coupons in January and a strong debt cancellation with international organizations”, underlines the PPI.
Has the trap been raised?
Exchange rate stability paves the way for the government to put on the table the unification of exchange rates and the rise in shares, which according to what was revealed at the Treasury Palace it could happen mid-year if the accounts are still in order.
For the MAP, “even if the measures promoted have allowed the authorities to build a window to prevent the economy from entering into crisis, these are transitory actions, which they seem insufficient to achieve the objective of stabilizing the macroeconomic framework and starting a process of sustainable growth”.
In this line MAP underlines that “Maintaining the current peg crawling scheme does not seem advisable either. Despite the greater transparency and clarity that has been attempted to introduce into the foreign exchange market, the presence of multiple exchange rates and the persistence of the actions (with staggered access to the free foreign exchange market and a calendar of payment terms for imports) demonstrate that the exchange rate problem is far from being solved.”
“To quickly eliminate exchange controls, promote a “V”-shaped GDP recovery, and deepen disinflation by extending the creeping rate to 2% per month, The BCRA must have sufficient reserves to support greater demand for foreign exchange (imports, profit transfer and external business formation), Equilibra highlights.
At Equilibra they warn that more foreign currency is needed to put an end to the actions. “At best, we believe it another $4 billion would be missing so that the stock of net reserves reaches balance again. In this scenario it would still be very complex to remove the trap., contain inflation and achieve a strong recovery in activity. “We need more dollars.”
“That doesn’t mean the current administration won’t be able to eliminate foreign exchange restrictions, but it does mean they would need to at least another 15 billion dollars to rebuild net reserves and ensure that a rapid stock exit is successful,” they conclude.
Source: Clarin
