He official exchange rate devalued 7.6% in May, thus accelerating the rate of adjustment in relation to the 6.5% in April, the 6% in March, the 5.4% in February, and the 5.5% in January. But the crawling peg – as the daily and controlled update of the official exchange rate is called in financial jargon – still late.
Inflation in May was 7.5%, according to the price index for the city of Buenos Aires, although at the national level private pollsters forecast between 8 and 9%. Meanwhile, the Survey of Market Expectations (REM) of the Central Bank(BCRA) projected inflation this Friday around 9%, although the Central Bank estimates that the official data -which INDEC will announce next Wednesday, June 14 at 4:00 p.m.- will be below, even, the figure of the fourth month of the year.
Official dollar: how was the beginning of June
The value of the wholesale dollar posted a rise of $4.10 in the first week of June, slowing down compared to the previous one, whose advance was $5.10. “The daily rate of devaluation of the official exchange rate showed a slight moderation in the last week. After closing the previous week showing an average daily Effective Monthly Rate (TEM) (5 rounds) around 7.85%, the rate The official exchange rate slowed down its evolution and averaged a TEM of 7.73% in the last 5 wheels”explained the economist from ecolatin Bruno Bonfanti to Ambit.
However, despite its restraint “peg crawling continues at close to 8% per month”he acknowledged.
In this sense, Bonfanti considered that “the complexity imposed by the ‘Front of the Dollars‘ (Net Reserves at negative levels) and the need to avoid further currency appreciation, They leave little room for maneuver for the Government to apply this year the traditional electoral recipe of delaying the official exchange rate“.
Official dollar: what will be the rate of devaluation in June
In this sense, the economists agree that the rate of devaluation in June will not accelerate, since if the rate of daily devaluation increases suddenly, inflation could accelerate and this is not what the government is looking for.
for the economist Gustavo Berthe crawling peg “would continue to run below inflation, as it has been happening”, and stressed that what this generates is a greater “exchange delay and therefore the loss of competitiveness”.
Although, according to Ber a Ambit, what I know “I would seek is not to add more pressure to the dynamics of inflation, using the delay as an ‘anchor’, also common in electoral periods”.
For his part, the economist Frederick Glustein agreed that the exchange rate update will be below the CPI, as in previous months. Although, he warned: “It will depend on the inflation data, but also on the negotiation with the International Monetary Fund. They are key moments in the macro, especially thinking about the pre-electoral process”.
He IMF He had asked the government in April to manage the crawling peg rhythm so that the dollar does not lose competitiveness. Although after the bullfight that month and with the impossibility of meeting the reserve goal as a result of the drought, the Government began renegotiating the agreement so that the multilateral credit organization would advance the disbursements scheduled for this year, among other flexibilities.
“The crawling peg will continue slightly above 8.0%,” the economist told this outlet. Natalia Motyl and explained that if it accelerates, the only thing that would be generated would be a significant rise in inflation. “It can go up to 8 or 8.5% but it will be below June inflation, which is projected today at 9%,” she said.
Source: Ambito
