The currency situation is very tight to project an easy exchange rate liberation, which the opening of the stocks would imply. The accumulation observed so far corresponds with the increase in net purchases derived from high commercial balance, supported by a larger harvest and postponement of payments for imports. However, the financial expenses associated with the external debt and the financial homeland absorb 55% of that effort of the productive sectors.
The analysis emerges from a document from the Social, Economic and Citizen Policy Research Institute (ISEPCi) which is signed by Rubén Ciani and which questions: “Are foreign currencies enough? It is a first question from which another arises, which is For what? In the exercise presented in this article the answer is: to open the trap. This is the first objective of the government on its path towards dollarization or currency competition“.
“It is also an objective that allows us to organize the analysis proposed by this exercise, since it allows us to make compatible the time horizon that the government declaims for the beginning of a new monetary regime in the country, with the seasonal period of greatest accumulation of reserves that observes the Argentine economy,” the document adds.
The analysis concludes that the currency situation is very tight to project an easy exchange rate liberation, which the opening of the stocks implies. “This situation would be independent of the dynamics observed in the harvest’s currency settlement,”which is delayed in relation to historical records”
The possibilities (or impossibilities) of releasing the trap
For the ISEPCi, even in a scenario of liquidation in historical averages, that is, without retention of the harvest by producers, and with the new sectors promoting foreign exchange, oil and mining, in a growth trend in their exports; “The results show us that not only the possibilities of releasing the stocks are in question, but also the exchange stability“The alternatives that remain for the government are greater debt and recession, a situation that is expressed in its priority of obtaining the so-called Bases law.
First of all, we must observe that the continuous accumulation of foreign currency in the Central Bank (BCRA) observed since the inauguration of the libertarian government, with a total of 7,548 million dollars, “It is reduced to only 45% of the net purchases of foreign currency by the organization, which were in the order of 16,113 million dollars until mid-May“.
Thus, the net purchases of foreign currency, which is the only positive factor, “It is essentially the result of the commercial exchange of goods and services (real sphere of the economy)”adds the document.
The rest of the factors are linked to financial movements, including those derived from the agreement with the IMF and debt securities issued by the national State (financial sphere of the economy). The minimum cash corresponds to the dollar deposits of individuals in the banking system and fluctuates around expectations of the price of the dollar.
The success of the Government?
The observed accumulation, which the government shows as a successcorresponds to the increase in net purchases derived from a high trade balance, supported by a larger harvest and postponement of payments for imports. However, the financial expenses associated with the external debt and the financial homeland absorb 55% of that effort of the productive sectors.
The ISEPCI is decisive in ensuring that the accumulation of reserves must continue until reaching a level of foreign exchange that allows the elimination of the stocks.. To this end, the accumulated value must be sufficient so that the net reserves, immediately available to the BCRA, have a positive sign and allow a moderate landing in the free exchange market, which does not culminate in a new abrupt devaluation of the currency, increase of inflation and currency flight.
In that order, the figure to accumulate to begin to have a positive result in net reserves is of the order of 2,000 million dollars, according to April data according to the average estimated by the economic plants; while the amount necessary to open the stocks, according to journalistic notes by libertarian economists (Espert, Diario Clarín 02/05/24) would be located at 5,000 million dollars of net reserves.
Considering the assumptions described, the level of reserves to be achieved should accumulate around 7,000 million dollars in relation to the values observed in the month of April, rising to 35,000 million dollars, the document adds.
Source: Ambito
