Last week, Central Bank president Miguel Pesce lowered the rate at which the dollar rose: he left it at 3.7% per month (this is more than 4%). With food increasing to 7%, the pesos earned from the sale of the dollar are gradually declining (not to mention blue six months ago was trading around $ 200). This is what is called exchange rate lag.

Central’s strategy, which treads on the dollar, has its explanation.

Pesce slowed down just before this Thursday, when INDEC published inflation in April (floor 5.5% calculate consultants). Since prices in Argentina are moving in the short term, typically, due to rising wages and dollars, and the Government has decided that revenues follow inflation, the BCRA has no choice but to calm the exchange rate. Otherwise, what Miguel Kiguel calls an ‘error’: that inflation is from 65% -70% to 100% in a heartbeat.

The result of this money manipulation can leave three effects:

• a corruption of the exchange buffer inherited in 2019.

• neighboring countries win being competitive regarding Argentina.

• he has more chances IMF make any objections to the initial evaluation that the staff will begin in the coming weeks: the weight is appreciated.

A study by economists Marcelo Capello and Nicolás Cámpoli of the Mediterranean Foundation shows economic sectors are not competitive when their products are quoted at the official exchange rate (the wholesaler closed at $ 116 on Friday) .

The most well -known case is cloth. The document shows that Levi’s 501 in Argentina is more expensive in dollars than in Brazil, Chile, Peru or Mexico. The same running shoes or a dress at Zara.

Foundation economists analyzed the prices of 16 products for 15 countries. And they found that in 24.5% of cases the dollar costs in Argentina are higher. Two years ago that number was 22%. And when the Government started with 8.5%.

The economy, on the other hand, is competitive when operations are conducted in the informal market. Something the Central Bank sees happening.

When you zoom in, you can see that the exchange rate distortion worsened between April and the first days of May: Reducing the impact of inflation, real depreciation was 7.5% against the dollar while the peso became 0.6% more expensive, consulting firm Quantum calculated. And Argentina’s exchange competitiveness against Brazil is at one of the worst levels in the past 22 yearspointing to the Mediterranean.

Economists are still not talking about the exchange rate delay. It has not yet reached the imbalance level of 2015 or even 2017. According to the Mediterranean last season, when Mauricio Macri won the election, 60% of the prices of products for those 15 countries were more expensive in Argentina than abroad .abroad.

Economist Fernando Marull focuses on another aspect of the problem: the balance of firms and the labor market. “The exchange delay has led to the salary in the official dollar returning to levels of US $ 1,000 per month (maximum four years), and this is very worrying for foreign companies – or Argentines – that measure their profitability in official dollars. “

Treading on the dollar with 60% inflation is not as durable as before inflation is 30%, as did Cristina or even Macri: now prices are moving faster and therefore it is necessary to adjust the dollar faster.

The IMF will make an observation. “Avoiding a larger appreciation of the peso compared to January 2021 and achieving positive real rates is relatively vague amid local inflationary acceleration,” consulting firm Delphos said of the promises assumed.

The Fund hates that the exchange rate is getting cheaper because it favors ‘flying’ and the body wants to collect. There is a goal of accumulating reserve within the program and devaluation will help to meet this.

But a cheaper dollar is useful not only to curb inflation but to comply with Cristina Kirchner’s proposals. On Friday, he criticized the Latin American and Argentine model of the early 20th century as “exporter and low-wage production.” “I’m not going to make the names of sister countries but we all know there are economies like this”.

great is really one of them. And its currency was the one that depreciated the most or, what’s the same, where the dollar rose. These are the countries with more margin to deal with a likely turmoil in the markets, which are starting to come out as a result of the global slowdown. Accumulate more reserves. How, then, will Argentina do to deal with a more stringent global context, as is likely to happen without an exchange rate margin? “There is something wrong”said Christina.