One of the main economic gurus of the American market put its eye on the management of the Monetary and exchange rate policy of the libertarian administration and, in line with local economists, stated that The peso is “totally overvalued” against the dollar and questioned the current scheme based on a 2% monthly depreciation.
“Argentina is a country that believes in pain for pain’s sake. The crawling peg means that the peso is once again completely overvalued“, he claimed Brooks, Following the announcement by the Minister of Economy, Luis Caputo, who, together with the head of the BCRA, Santiago Bausili, reaffirmed the current exchange rate policy.
The American economist explained that the current situation causes “the compression of the imports has to do all the work on the trade balance.” “Historically, Argentina has never sustained this. This always ends in devaluation…”he assured.
Wall Street economist Robin Brooks: “Different leader. Same mistake…”
It is not the first time that Brooks raises the alarm about the exchange rate scheme implemented by the tandem Milei – Caputo. Days ago, he said that Argentina is repeating the same erroneous patterns from previous times and warned of a new delay in the exchange rate.
The bank’s former chief strategist Goldman Sachs He said that Argentina “devalued in December, but now it is has wasted any momentum potential for exports.” “This is because The real exchange rate has returned to its pre-devaluation level. Argentina is the same story over and over again“Different leader. Same mistake…”, the economist warned.
The ITCRM (Multilateral Real Exchange Rate Index) calculated by the Central Bank was at 87 points on July 3, below the theoretical equilibrium exchange rate of base 100. Wall Street investment banks such as Barclays had already been warning about the Exchange rate lag in Argentina.
Brooks also noted that the lifting of the exchange rate restriction, which is much needed in his view, faces the challenge of a “strong exchange rate and a high volume of local debt to be refinanced.”
Domingo Cavallo and Hernán Lacunza’s criticism of the exchange rate lag
At the local level, former Ministers of Economy Sunday Cavallo and Hernan Lacunza They warned about the danger of maintaining the exchange rate lag over time.
Through a note published on his personal blog, the former minister of Carlos Menem and Fernando De la Rúa, praised on several occasions by Milei, recommended that the Government “pay attention to the suggestion implicit in the latest report of the IMF staff,” in regards to the elimination of the dollar blend (scheme by which today 20% of exports are settled at the CCL) and a 10% adjustment in the official exchange rate.
While Mauricio Macri’s last Minister of Economy warned that If “we continue to declare an incipient exchange rate lag” it will be more difficult every day to “get out of the trap”something essential to begin the second stage of Javier Milei’s government.
“The next stage (of the Milei government) should end, not immediately, but not in the too distant future either, with lift foreign exchange restrictionsAnd I say not too far away, because If not, there will be no credit, there will be no reactivation, then everything will become complicated. And so, it will be difficult to lift the restrictions if we continue to declare an incipient exchange rate lag,” Lacunza warned.
Recently, the president Milei He talked about the dollar and the crawling peg -the rate of devaluation of 2%- and denied that there is an exchange rate lag as some voices in the market claim. In addition, in his message on social network X he reviewed the 5 main points of his economic plan.
The president stated in his tweet that one cannot speak of exchange rate lag without taking into account the context and considered that, taking into account a series of variables, what is seen in the economy is, more than a dollar in arrearsa Relative price readjustment.
Source: Ambito
