Currently, although the gaps are still far from the extraordinary levels of a year ago, during this last week they climbed to maximums in a long time; the blue dollar climbed to $ 195, for which the spread with the official surpassed 96%, a record of 2021. In the stock market segment, the gap with the “regulated” CCL was also at its highest for the year, while the “free” CCL, operated via bilateral negotiations or ADRs, exceeded $ 200, leaving a gap above 100%.
In this context, Walter Morales, president of Wise, assured this medium that “if the Government does not launch measures to reassure the market, the gap will continue to increase in the CCL that we can operate, not in the intervened one.” “Always before the elections this happens when there is a moment of uncertainty. This time it does not have to be the exception ”, he added.
For its part, Juan Ignacio Paolicchi, an economist at the consulting firm Empiria, clarified “the acceleration is difficult to predict as it is a financial variable” but warned that “taking into account that the monetary issue is going to continue accelerating, it is very likely that the pressure on the gap will persist.”
“With this level of gap, Argentina was never able to accumulate reserves. Quite the opposite. That’s what worries me the most. For Argentina to start accumulating reserves and moving on a growth path, a stabilization plan is necessary and the gap is below 40% ”, he told Ámbito Rodrigo Alvarez, director of the consulting firm Analytica.
In this sense, the economist argued that, discounting that there will be an agreement with the IMF, the same “necessarily has to contemplate as an objective that the gaps decrease”. “Closing the gap is impossible without a credible program and without some flexibility in capital market operations. The program with the IMF has to be very broad and has to have a meaningful political agreement. These issues are not trivial, given the context and the outcome of the PASO, ”he added.
In line with this view, Morales affirmed that an agreement with the fund is key to help strengthen reserves, taking into account that “after until 2025 we have practically no strong maturities in hard currency.” However, he maintained that the most important thing continues to be “how we are going to play on that field that is going to be bigger.”
The situation in October 2020 reflected a notable jump in devaluation expectations, which according to the Minister of Economy, Martin GuzmanThey were “very far” from representing Argentina’s ability to generate income in dollars. “Argentina is not a country of US $ 17,000 per capita, but neither is it a country of US $ 4,000 per capita or less, a number that corresponds to the current value of the cash with settlement,” said the official in that then.
From there, and from Guzmán’s greater prominence in decisions, exchange rate policy took an important turn. On the one hand, some of the regulations that had been established on September 15, 2020 were relaxed. Second, the intervention of public bodies in the stock market intensified to reduce the MEP and CCL prices; this operation consisted, and still consists, of selling public bonds that are priced in dollars absorbing pesos, and then repurchasing those securities with reserves.
The gaps were significantly reduced, falling below 60% at the end of March this year. At the same time, after falling about $ 5 billion in four months, reserves began to rebuild (although much of it was used to intervene in financial dollars). It is worth clarifying that this was favored by the great performance of exports, driven by record prices in commodities. According to recent INDEC data, the accumulated exports of 2021 are the highest since 2013 and the trade surplus is the highest in the last decade.
Nevertheless, the “summer” seems to have been left behind due to the decline in international prices of raw materials and the uncertainty in economic matters due to the few certainties about the agreement with the IMF and macroeconomic imbalances that seem difficult to overcome in this context, such as the fiscal deficit and inflation.
In this framework, while the Central Bank has validated a very limited rate of devaluation of the currency, in the order of 1% per month, the market estimates that the government will have to consider a greater exchange rate correction sooner rather than later.
“If you are going to devalue the official exchange rate, you need a consistent and credible plan to anchor market expectations. It is essential to avoid a greater acceleration of inflation ”, warned Paolicchi.
Bearing in mind that with rates and the official dollar “trampled” we continue at inflationary levels above 3% per month, Álvarez projects that “when these adjustments begin to be corrected, inflationary acceleration is inevitable”. Therefore, he noted that “the Government will have to draw up a stabilization plan to avoid a significant acceleration in prices.”
“Without a plan it is very difficult to avoid that a necessary increase in the exchange rate does not end up propping up inflation. Once and for all we must start having a plan that ends up cutting off the monetary issue,” Morales said. The specialist explained that from Wise they maintain that “the minimum dollar would have to be increasing 38% per year to remunerate the reserves at the same rate as the Central Bank’s liabilities.”
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