According to Ámbito, officials monitor current price dynamics based on high-frequency measurements and evaluate the opportune moment to advance in a correction of the rate of depreciation. The BCRA prepares an increase in the rate of slippage of the official dollar to bring it closer to the inflation rate, although without exceeding its level.
With a strict exchange rate hold that allows it to manage the evolution of the exchange rate used for foreign trade (a policy known as crawling peg), so far this year the Central Bank has deployed an exchange rate anchor strategy with the intended to help slow down very high inflation. Since March, the wholesale dollar has advanced about 2 percentage points below the monthly consumer price index (CPI). The growth of inflation in the world, the recomposition of businessmen’s profit margins and macroeconomic imbalances undermined this objective.
In the economic cabinet they consider that the devaluations of 2018 and 2019 plus the exchange rate slip slightly above the CPI in 2020 had left room to set the exchange rate anchor without threatening the competitiveness of the economy. Even more so at a time of improvement in the terms of trade for Argentina. Although they maintain that the real exchange rate is not backward in historical terms, the delay in the deceleration of inflation and the need to maintain a high level of exports in 2022 so as not to block the possibilities of recovery in economic activity are beginning to push a retouching in the crawling peg rhythm, something that was already suggested by the Budget project that Martín Guzmán sent to Congress and whose treatment was kicked in after the presentation of the multi-year program.
With everything, Officials rule out an acceleration in the rate of depreciation to the levels predicted by the market, well above inflation projections, according to the price of dollar futures contracts. And they speak of a gradual approach towards the CPI, at the same time that a monthly decline in inflation is achieved. The premise is not to add fuel to the prices.
Thus, as this newspaper advanced, they expect the BCRA to continue pocketing profits in both the Rofex and the MAE in the face of investors who are betting on a devaluation. In November, the entity could earn about $ 3.5 billion through its intervention in futures, which would be added to the $ 14.5 billion harvested between January and October, and the $ 23.5 billion in 2020.
The confirmation of this scenario will depend, of course, on the final letter of the agreement reached by the Government with the IMF staff, with whom it is going through days of intense negotiation to present the multi-year plan in the week that runs from December 6 to 10. . But that is Guzmán and Miguel Pesce’s foreign exchange roadmap.
Official sources assure that the main points of tension with the organization do not go through the level of the dollar and are confident that a continuity of exchange control will also be validated: The Fund knows that it would be a chimera to lift the stocks and, at the same time, accumulate reserves, Washington’s obsession to guarantee the repayment of the US $ 45,000 million it lent to Mauricio Macri. As reported by Ámbito, the rate of growth, the path of fiscal adjustment and the issuance are the main points of contention in the face of a program that will condition the country and leave a permanent audit of economic policy.
Maintaining exchange restrictions for the next few years until scarce reserves are strengthened is vital to the Government’s objective of avoiding a devaluation that puts the economy’s recovery at risk and further exacerbates the social crisis. It was along these lines that last week the Central’s board of directors ordered the prohibition of the purchase in installments of tickets and other tourist expenses abroad. A measure with political cost in middle and upper sectors that sought to cut a subsidy in pesos to an activity that threatened to begin to escalate the demand for foreign currency: in October, the deficit for tourism and other services abroad was US $ 595 million and tripled the average for the first semester.
Also in the same vein were the obligation for banks to maintain a global net neutral foreign currency position and the movement of intervention in financial dollars. All of them measured with the focus on containing the drainage of reserves in times of unfavorable seasonality. With the objective that the scarce dollars are used for productive demand, the exception to that matrix was the relaxation of the limit on the advance payment of imports of capital goods of up to US $ 1 million, which had been restricted in October.
Those decisions were read in the market as a kind of official acknowledgment of the critical situation regarding reserves. Officials dismiss a disruptive scenario and expect a somewhat calmer December with the entry of the wheat harvest and the arrival of some disbursements from multilateral banks.
Source From: Ambito
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