Yes ok the future dollar curve falls this daythe contracts already show an acceleration of the pace of the crawling peg that the Government of Javier Milei had set on 2% monthly after the increase in the official exchange rate of 118%. From the Treasury with Luis Caputo At the head they had assured that with the fiscal anchor it was enough to moderate expectations but the rapid rise in prices (an CPI of 30% is estimated in December) would cause a discreet jump in the official dollar.
Thus, this day, in Matba-Rofex the contract to February it is located in $874Meanwhile in March jump to $973 and in April to $1,083.0. About Salvador Vitellihead of research Romano Group had mentioned from his networks that “for each day that passes, With this crawling and inflation, the official dollar loses $5.8 pesos per day in real terms”.
Does the crawling pegDoes it accelerate or is there a discrete jump?
From Wise Capital They asked themselves that same question and answered: “We don’t believe it can sustain it because inflation will cause the pace of export liquidations to slow down, and the BCRA needs to accumulate. That is why the exchange rate will need to be adjusted again.“.
In this regard, they recalled that the Central Bank (BCRA) had highlighted the role of the official dollar as a complementary anchor until the fiscal effort is truly appreciatedonce again stating a crawling peg 2% monthly for “provide a nominal anchor that extends beyond the period of honesty of relative prices.”
In turn, in dialogue with this medium, the economist Amilcar Colante also gave his vision: “I think that projecting December inflation and the rate adjustments that come in February the dynamics of the crawling peg and they will probably have to adjust it (4/6%) . Currently, you have inflation above 25% (close to 30% in December).”
And he announced that, in the base scenario, The exchange rate will appreciate and then in April/May the dollar will be unified.
Camilo Tiscorniaeconomist C&T Associates, coincided with the previously detailed analyses. “I think it can accelerate in the summer.”he told this medium and added: “But I also don’t think they move it too fairly so as not to generate more inflation.”
Lastly, since Cohen They also pointed out that inflationary dynamics would complicate daily microdevaluations: “We do not see it likely –or at least we do not see it as a favorable aspect– that the BCRA maintains the devaluation rate of 2% monthlyso we expect that starting in 2024 the rate of rise in the exchange rate will gradually accelerate 5% in January, 8% in February and 11% in Marchwhich will allow the TCRM to be at the levels of last August, after the post-PASO exchange rate jump.”
Exchange anchor and the stabilization plan
The financial analyst Christian Butler in conversation with Ámbitó explained how does it work crawling peg of 2%: “This is a monetary policy decision and exchange rate policy. Every stabilization plan in Argentina needs and always uses an exchange anchor. A dollar rising at 2% monthly with inflation at 30% works as an anchor for you. The problem is having an inflation of 30% in December, 20% in January and 10% in February because those $800 in real terms would be $490.”
If that scenario were to occur, according to the analyst, You would be forced in March to have to make another exchange rate jump, with which the price adjustment would begin again due to the increase in the official price.. Another alternative, he mentioned, would be to accelerate the crawling peg, for example, to 8% per month.
“What happens is that the anchor is smaller there. Because the higher the crawling peg, the smaller the exchange rate anchor, which means you have a smaller brake on the inflation that you want to control. In economics there is nothing that is totally independent, all the variables are interrelated with each other,” Buteler concluded.
Source: Ambito
