He International Monetary Fund(IMF) could suggest the Argentine economic team headed by the minister Luis Caputo that accelerates the speed of “Crawling Peg “the gradual devaluation policy of weight against dollar. The issue has appeared in the conversations held by Argentina’s negotiators with the agency.
Currently, the government maintains an exchange rate that fits due to 1% monthly as a fundamental attractive point for the “carry trade” investor, But the IMF fears that this rhythm can be insufficient to avoid exchange delay, which would force the Treasury Palace to sell greater amounts of reservations to maintain the exchange rate. An acceleration of “crawling” would allow – believe in Washington – that the BCRA gradually remove the liquidation of dollars by the so -called “dollar blend” of exporters. This suggestion could have deep implications in the economy, since an acceleration in weight devaluation could generate both benefits and risks.
Crawling as an element of exchange certainty
He CRAWLING PEG It began to be implemented in Argentina in the mid -1990s as a strategy to maintain the relatively stable exchange rate, without resorting to sudden adjustments that could generate inflation or destabilize the economy. This gradual adjustment system was used in several moments in the country’s economic history, but charged particular relevance in recent years, when inflation shot and the currency suffered pressures. The idea behind the crawling PEG is that the value of the local currency adjusts predictably and a constant rhythm against the dollar -a kind of “table” -, avoiding great jumps that generate uncertainty.
In 2024, the Central Bank of the Argentine Republic (BCRA) established a CRAWLING PEG of 2% monthly, in an attempt to find a balance between avoiding a new sharp devaluation and giving guarantees to financial investors who brought their dollars to put them at rate in Argentine pesos. This initial devaluation rhythm was chosen under the assumption that a somewhat faster adjustment could help export competitiveness and relieve pressure on external accounts. However, with the passing of the months and the persistence of inflation, the authorities decided to reduce the speed of devaluation to a 1% monthlyseeking to contain the inflationary impact and offer greater predictability to economic agents.
The 1% monthly adjustment, however, has not been exempt from criticism. While the measure sought to avoid an abrupt increase in internal prices, it has also generated signs of exchange delay. The official exchange rate, when maintaining practically at the same levels as the financial (just a 14%gap) has forced the BCRA to part with potential reserves in order to conserve exchange stability and, therefore, of prices.
The IMF request and a potential intermediate output
For this reason, the IMF has begun to suggest a acceleration of the rhythm of devaluation. A more aligned exchange rate with the reality of the market could reduce tensions about reserves, since the BCRA would not have to intervene constantly to maintain the official parity and that of the financial dollar via bonds. In Washington they believe that increasing the speed of crawling PEG could reduce distortions in the exchange market, helping a better allocation of resources and preventing the official exchange rate from continuing to lose competitiveness against the values of the parallel market.
However, the acceleration of devaluation also brings certain risks. One of the main challenges is the impact on Inflation. A faster devaluation could be translated directly into an increase in internal prices, since many companies transfer the cost of imported supplies to the final price of products. This could generate a vicious circle in which inflation feeds more inflation, affecting purchasing power.
In addition, the social effects of a greater inflation They are not minor. In this context, President Javier Milei met last week with the IMF managing director, Kristalina Georgieva, in Washington DC during the meeting, key aspects of the stabilization and growth plan of Argentina were discussed, highlighting the “significant results” obtained so far. Georgieva emphasized the importance of continuing to work constructively in a new program that supports the country’s economic efforts.
In addition, the Minister of Economy, Luis Caputo, held a telephone conversation with the Secretary of the United States Treasury, Scott Besent. In this call, “possible areas of collaboration” were addressed and there was praise for macro stability, although it had an introductory character.
The credits in dollars that feed the carry trade and a distrust button
The government seems determined to Stretch the “Carry Trade” one way or the other. The reduction of “Crawling PEG” to 1% monthly promoted a renewed wave of operations due to the rate differential in pesos.
The “Carry Trade” consists of taking credits in dollars, liquidating them in pesos in the single and free market (Mulc), and placing those pesos in instruments with higher yields in local currency. Under a scenario where the cost of dollar credit is 6% per year and the “crawling peer above 30%. This generates virtually risk -free profits for those who access the official market.
As noted on other opportunities, it is important The dollar is not backed by the BCRA. Despite this risk, the attractiveness of the “Carry Trade” maintains its validity for investors: dollar credits grew significantly in 2024, reaching a stock greater than USD 10,000 million, compared to less than US $ 4,000 million from Start of the year.
The government commitment is to extend the useful life of this scheme. Recently, the BCRA has just approved the possibility of making credit in dollars for those that do not generate the corresponding dollars. Strictly The BCRA eliminated the restriction that prevented since February 2016 that the financial institutions provide the funds obtained through placing abroad to non -export clients. Now banks can lend dollars to any client regardless of whether or not they generate currencies, as long as the funds come from abroad.
The former vice president of the BCRA, Jorge Carrera, considered that without that mechanism, Net reserves would be even more negative than the current -U $ 9,000 million. But the fact is that there would still be a growth margin of around US $ 3,000 million of the dollar loans. Carrera warns that with the new dollar loan scheme “there is a higher risk” And he puts on the table a central issue: “In our financial system there is no lender of last instance in dollars, except at this time.”
Another reading appears in the futures market. For example, short -term futures maintain an annual nominal rate (TNA) of 22% while the devaluation proposed by the Government does not exceed 12%. That is, while the differential of the monetary policy rate versus the devaluation is 18%.
Some analysts see in this signal a certain distrust of the market to sustain a 1% monthly crawiling.
Source: Ambito
