The government began on Monday a strategy not publicized To ensure that the dollar does not reach the band’s roof exchange, set above $ 1,450.
This plan, designed from the Palace of Finance, is based on two main axes: on the one hand, the commitment of President Javier Milei, manifested before legislators in the fifth of Olivos on the last Tuesday, of Protect the upper limit of the exchange band -Eventually through the sale of dollars from the Central Bank, obtained through the recent loan of the International Monetary Fund (IMF)-; on the other, the determination of the Minister of Economy, Luis Caputoto prevent the market from testing this promise, using all monetary instruments at your disposal.
The tender of letters launched by the treasure, apart from the usual schedule, Give this maneuver. This operation, which is carried out this Monday and is exclusive for banks, offers a letter to the variable tamar rate (which is adjusted by the interest rate of the fixed wholesale deadlines) expiration on November 28.
Javier Milei’s unexpected promise with the dollar and the word of Ricardo Arriazu
In a meeting held on Tuesday night at Fifth of Olivos, Milei assured the legislators to do “everything that is necessary” to preserve the exchange band system and prevent eventual overflow derive in price increases. The president implicitly transcend that the Central Bank would intervene selling dollars if the exchange rate was approaching $ 1,450, seeking to consolidate the support of legislators to sustain the economic plan against Congress and public opinion.
In tune with this confession, in a recent talk, the economist Ricardo Arriazu It was explicit about government priorities: “The number one objective of the government is that the dollar is not escaped and, for me, they are comfortable between $ 1,250 and $ 1,320. They will do the impossible so that the dollar does not reach the band’s roof. They will intervene with anything, with monetary policy and future dollar. ”
This statement reinforced the perception that the Executive is committed to maintaining the exchange rate within a controlled range, using multiple tools to prevent the market from testing the upper limit of the band. Milei guaranteed that the reserves of the Central Bank, from the IMF disbursement, would be used to defend the exchange ceiling. However, Luis Caputo was clear in his approach: “The data is that we will not allow more weights and we are not going to buy dollars in this situation because we do not want to inject weights.”
Thus, in the opinion of analysts consulted from the City, it would be expected that the government prioritizes the liquidity absorption to avoid pressures on the exchange ratewhich would explain the emphasis on monetary measures such as today’s tender and the increase in bank lace, instead of direct interventions in the exchange market. The release of liquidity generated by the disarmament of financial instruments would have created an excess of weights that was not absorbed by the demand for private credit, due to the restrictions imposed by the exchange rate to companies.
In the opinion of the experts, this mismatch forced the treasure to assume a role that usually corresponds to the Central Bank: administer the short -term liquidity. As a consequence, The State faces higher interest rates –All of a monthly 3.95% in the last debt issuance in pesos, compared to 2.38% of previous instruments – and a financial pressure that, they warn, puts tax sustainability at risk.
Do not use reservations, a promise to the IMF
Caputo’s strategy seems to respond to an implicit commitment to prevent the market from testing the Central Bank to sell dollars. A source familiar with the operations of the Palace of Finance, currently distanced from the economic team, suggests the existence of possible conditions not disclosed in the agreement with the IMF. These clauses could restrict government freedom to sell reservations, which would reinforce Caputo’s preference for monetary toolsas operations in the futures market mentioned by Arriazu, to maintain the exchange rate under control without resorting to reserves. This plan, although effective in the short term, is not exempt from risk.
The source consulted warns that the Government fears that a direct intervention in the exchange market reveals limitations in its commitment to the IMF. If the dollar approaches the roof of the band and the Central Bank does not respond with the promised forcefulness, The credibility of the economic program could resent. This risk explains the caution of Caputo, who seeks to avoid any additional injection of weights that can feed the demand for dollars. The political context adds a layer of complexity.
With legislative elections on the horizon, the government seeks Avoid any signal of exchange instability that can generate uncertainty. Recent measures, such as the adjustment of bank lace, reflect a clear intention to prevent the dollar from reaching the band’s roof, even when the impact of the July devaluation (13%) in prices was moderate, with an inflation of 1.9%.
This caution could be motivated by IMF restrictions that have not been subjected to legislative scrutiny. The government faces a delicate balance. You must meet the expectations generated by Milei’s promise to defend the exchange ceiling, while preventing the market from discovering if it is really willing – or authorized – to do so. The lack of transparency in the agreement with the IMF feeds suspicions on non -public conditions that could limit the intervention capacity of the Central Bank. While the government advances with its reserved plan, the market remains attentive, waiting for indications that reveal whether the commitment to protect the band’s roof is as firm as it is announced or if hidden restrictions imposed by the IMF.
Source: Ambito
