President Javier Milei flatly refused to change the rule of increasing the official price of the dollar by 2% per month. “There’s no point in doing that.” He said it this week in an interview on Bloomberg, referring to the criticisms that many economists are making these days: the weight is appreciating excessivelymany warn.
The official dollar closed on Friday at 881.50 dollars, the blue one below 1,000 dollars and liquidity, the one most used by companies to operate abroad, costs 120 dollars less than at the beginning of the year.
It is not only the IMF that talks about the need to abandon this transitional exchange rate policy scheme.
Former Economy Minister Domingo Cavallo published a blog post on Friday warning of the appreciation of the peso and that the dollar in the $1,000 zone would not represent the long-term real equilibrium exchange rate for three reasons: restrictions on operating in the CCL still weigh heavily, salaries and pensions will sooner or later recover what has been lost and dollar costs are at levels that discourage export activities. The former minister recommends reveal (something he had already said in 2023), adjust the devaluation rate to 2% per month and let the banks freely decide the interest rate.
For their part, the economists Miguel Kiguel AND Andrés Borenstein from Econviews, say that no matter how many reserves the Central Bank has purchased in recent months, they do not reach the levels with which it could defend parity.
What alternatives remain? The first is to set a growth target for the monetary base. Another exchange band. “The advantage of an exchange rate band is that it is an intermediate regime between the fixed and floating exchange rate. It puts a ceiling and floor on the exchange rate, but within the band the exchange rate fluctuates, so the Central does not need to defend parity. kilos AND Israel “In a context of uncertainty they resorted to exchange rate bands to stabilize themselves.”
Caputo implemented a tiered system in 2018.
Argentina has committed to the IMF to abandon exchange controls and the current scheme of financial repression March AND June. Although he achieved his goals with the organization, The results still don’t allow him to remove the trap.. “Hasty reunification and liberalization, say in the middle of the year, risk failing,” says Cavallo.
Commitments with Next year, Argentina’s creditors will exceed $7 billion in principal and interest. No matter how much primary or chainsaw surplus you get, Without reservations, these payments cannot be canceled.
Source: Clarin