The peso has only been so appreciated four times in the last 30 years but they warn that a devaluation may not happen. However, there are several risks behind it.
From a previous report they warn that The peso was only so appreciated four times in the last 30 years but they warn that a devaluation may not happen because there are at least three legs on which the Government relies (surplus, money laundering and Vaca Muerta), however the risks are clear.
It is so that since the consultant 1816 in a text that travels around the city titled: Strong weight for a while? They thought about what problems the macroeconomy could have if the peso continues strong in the long term. So they determined three central problems:
- If the international context becomes complicated or there is a political scare, they warn that the potential for the peso to fall could be very large and The BCRA does not have net reserves to face a fall in peso demandor (reserves continue in negative territory).
- To this CCL, stocks of pesos measured at the financial exchange rateor (which in Jan-24 did not reach US$50,000 million) They already exceed US$100,000 millionif we take private M3 + Treasury securities in non-bank private hands.
- At this exchange rate there are uncompetitive sectors (tourism, regional economies, some industries, etc.) that, if “the status quo persists, could destroy employment without the guarantee that other more dynamic sectors can hire said workers.”
In fact, from this report, they assure that despite achieving “everything goes well” you will have the symptoms of what economists call the “Dutch disease”with some very winning sectors (the most competitive exporters such as energy, services and non-tradables) and very losing sectors (other exporters or producers of tradable goods for the domestic market).
Exchange rate: the other four times it was so appreciated
In the last 30 years, according to the consulting firm 1816, there were at least 4 occasions in which the real exchange rate reached current levels: in the last years of the Convertibilityat the end of Cristina Fernández de Kirchner’s second term, with Mauricio Macri in 2017, and the last months of Alberto Fernández. “Each of these episodes was followed by large devaluations of the official exchange rate”they warned.
Despite this historical fact, they are betting that perhaps this time it will be different. “The thing is the combination of a country with a fiscal surplus (something that was not present in any of the 4 mentioned opportunities; as we show on the next page, we have already had 10 consecutive months of primary surplus), Vaca Muerta potential on the horizon (which will soon generate exports of more than US$15,000 million a year) and the whitewashing as a bridge in 2025 (providing foreign currency in the short term to cover debt maturities) forces us to take seriously the possibility that the appreciated real exchange rate cycle could extend over time,” this consultancy explained.
Source: Ambito
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