“I am comfortable with the dollar at $1,500” said this Thursday the Minister of Economy, Luis Caputo. Sources close to the official leadership point out that this statement has as a background the Government’s expectation that – if next Sunday’s elections are not catastrophic (La Libertad Avanza gets close to 35% of the votes) -, Next Monday there should be a significant supply of currencies in the market, given that a good part of the economic agents have become excessively dollarized.
At the same time, at the Treasury Palace they received information that, although the result at the polls is not favorable for the administration of Javier Mileiequal The United States will continue to support its program.
If the official forecast of a result in the elections that ratifies the Government’s course is fulfilled, in terms of economic management, operators are expected to dump the excess dollars they accumulated in recent weeks. Faced with this hypothetical scenario, The intention of the Treasury Palace would be to buy foreign currency to rebuild reservesas requested by both the International Monetary Fund and the United States.
So, The exchange rate bands could be maintained, holding the exchange rate, it is speculated, close to the ceiling.
Exports
It must be taken into account, they point out in the economic team, that Exports are at record levels, confirming that the dollar is not behind.
Hence the minister’s statement that “The exchange rate, as (United States Treasury Secretary Scott) Bessent rightly said, far from being low, is an already rather high exchange rate.”
If all Argentines suddenly decided to get rid of the national currency to convert to foreign currency, about US$70 billion would be needed, that is, the equivalent of all pesos in circulation and deposits in the private financial system, according to a calculation made ten days ago by the Cohen Group.
According to this estimate, towards the middle of the current month the The Central Bank had sold dollars in the futures market for US$6.5 billion, The Government placed dollar-linked bonds for US$7.1 billion and in the last run the Treasury sold US$1.1 billion.
It is a total of US$14,700 million, equivalent to 20.9% of those US$70,000 million. AND The proportion rises to 37.5% if only currency and demand deposits (not fixed terms) from the private sector are considered. (US$39,000 million).
It should be added that In the last rounds this tendency towards dollarization was accentuatedin a process that It just moderated in the last few hours.
This Thursday, in a context in which reports circulated about a new intervention by the US Treasury in the exchange market, the wholesale dollar closed at $1,479, that is, $10 below the close of the previous day. Financial dollars also fell, falling 3% – the CCL stood at $1,558 and the MEP at $1,539.
Support
“If the government does not do well in the elections, the United States will double down on the administration of President Javier Milei.” This information was circulated in sources close to the economic team in what is considered a strong commitment from the administration of donald trump to ensure the continuity of the process started at the end of 2023.
In this context, it is understandable that President Javier Milei has appointed the Secretary of the Treasury, Pablo Quirno, as Chancellor, who participated in all the negotiations carried out with the United States government.
The White House strategy is to prevent populism from ruling again in 2027 and, from his hand, advance China’s interests in the country, the main geopolitical enemy of the first power, according to Washington diplomatic media.
Source: Ambito
