During the last week, the dollar showed instability and reached its maximum peak of $ 1,390 since the Government He announced, in mid -April, the flexibility of the stocks. This led to Milei management to announce that the National Treasury would intervene – since Tuesday – in the Single and Free Market (Mulc) to “contribute to its liquidity and normal functioning.”
This decision generated uncertainty because the agreement signed by the Executive with the International Monetary Fund (IMF) He argued that he Central Bank (BCRA) It would intervene in the Mulc only when the exchange rate reached the floor or roof of the band. In this regard, the economist Miguel Kiguel He analyzed the reasons for the tension that the Government is going through in the prior to the Buenos Aires elections. “Argentina has a debate about the exchange rate and How to accumulate reservations. During the first 18 months of Milei there were many successes, but this stone was always in the shoe. “
The discussion about the value of the dollar and reserves
In that sense, the head of the consulting firm Econviews insisted that this issue is still in the country. “Without reservations or with very few -without counting the dollars of the fund, Argentina has negative net reserves -the question is how Argentina makes to accumulate reservations. And the truth, when one goes to a textbook, they tell him: you indebted or buy in the market“He explained.
In that line, he remarked that the discussion is in why he did not buy “so far”: “He has not been able to do it because he has lay a preponderant objective that has been to lower inflation “, He expressed and pointed out that in that line “objectives” such as “accumulating reservations” were “sacrificed.
In this regard, Kiguel recalled about the repeated demand of dollars in the exchange market for Milei. “We had a problem in July-August of last year, When the harvest also ended [del agro] And it was solved with money laundering [de capitales]; Earlier this year, again the dollar escapes and lost reservations. The dollars came from the bottom and that calmed down. “
Why the government has to accumulate reservations, according to Kiguel
In another fragment of the interview, the economist explained that A higher exchange rate would allow accumulating dollars and lowering the country risk, among other aspects.
“In the long run, it helps you generate trust and improves the situation [económica]. Now, when the exchange rate goes up, there is a mechanical effect: Imported goods are more expensive (cars and computers). What is related to imports or exports (meat) has an impact on prices, “he argued.
In this potential scenario, the government should be willing to pay the cost of having a slightly higher inflation index, according to the head of Econwievs.
“In the short term, you have an effect on prices. In the long run it helps you because (…) you start buying dollars, investors see that this dollars enter, there is more confidence in the country, you lower the country risk, you can borrow and you continue accumulating dollars. It is a virtuous circle,” Kiguel emphasized.
And he stressed: “I imagine that the government is willing to accept the cost of higher inflation, in exchange for improving all the country’s landscape.”
Source: Ambito
