Dollar: devalue or float aimless
The government, meanwhile, plays the mystery. Luis Caputofrom the Ministry of Economy, insists that There will be no abrupt devaluationbut the IMF pressure and market movements could force a correction earlier than expected. Milei, faithful to his libertarian speech, has flirted with the idea of a flotation, although always with stability as a flag. However, last Friday the market gave an unequivocal signal: lA speculation with the future dollar shot, with contracts in the Rofex that reached almost 2 million operations and rates that approached 30%a jump that set alarms in the government. The reservations, after the sale of the BCRA, were at US $ 28,088 million, a level that does not reassure anyone.
The ghosts of the past do not help. The 2018 experience, with an exchange band that ended in run and crisisit is fresh in collective memory. “Argentina is not Peru or Uruguay; here the dollar is not just a currency, it is an obsession,” a local consultant analyst graphically. The bimonary economy, where the weight lives with the green ticket as an account unit for almost everything, makes any abrupt movement in the exchange rate quickly move to prices. On Friday, the banks took advantage of the Mulc to dollarize positions, forcing the BCRA to intervene strongly and making it clear that the exchange pressure does not give truce.
From the IMF, the posture is inflexible: Without greater exchange flexibility, there is no fresh disbursement. The organism sees in the flotation a way of unlocking the stock and attracting investments, but underestimate, according to critics, the risk of social destabilization. “I am an enemy of the stocks, but more enemy of collapse,” Arriazu said, summarizing the dilemma facing the government. The massive sale of dollars on Friday, which some attribute to a “rearrangement” of banks before a possible agreement with the IMF, only feed the doubts about how much the current scheme can resist.
Carlos Rodríguez’s offensive: There are plenty of pesos
In this context, the economist Carlos RodríguezMilei’s exassor, came out with the tips to refuse the official narrative about the amount of pesos in the economy. “On March 7, The monetary base reached $ 30.8 billion pesos. In addition, the treasure owed a lefi stock (financing letters) for $ 10.7 billion. The Lefi replace the passes, the treasure is broadcast exclusively for banks, but are redeemable at all times in exchange for pesos in the BCRA, “Rodríguez said in recent days.
And he did not stay there: “The treasure has 9.2 billion deposited in the BCRA, spent at any time, and the liabilities of Bopreal bonds remains, issued by the BCRA to redeem importers, which reaches almost $ 11 billion, including some remnant Lebac. It seems that on Friday 14 many boppreals were redeemed.” Rodríguez estimates that, “adding Lefi, treasure deposits and bopreal, there is a potential broadcast of $ 30.9 billion pesos, exactly the same as the amount of the monetary base of that day. That is, in required debts there is 100% of the monetary base in potential broadcast as of March 7, 2025 “.
For him, this 100% potential emission, combined with an annual growth of the 186% base – very above the annual annual prices – “suggests the existence of a strong monetary imbalance, sustained by the stocks and high interest rates.” “If there are not going to be pesos in the market, what are those who do not have dogs to bleach and sell to the official dollar to the BCRA?” He triggered, comparing the situation with German hyperinflation with excessive taxes.
Domingo Cavallo, Emmanuel Álvarez Agis and Marina Dal Poggetto
The discussion about the dollar also added voices of peso in recent days. Domingo Cavalloformer Minister of Economy, warned in early January that the exchange rate is behind 20%, a “similar” appreciation to that of the final years of convertibility, which ended in crisis. In his blog, Cavallo argued that this situation discourages exports and encourages imports, deteriorating the balance of payments, and suggested that an exit of the stocks with exchange adjustment would not interrupt the disinflation, although the government postpones it for fear of volatility.
For its part, Emanuel Álvarez Agisformer Vice Minister and head of PXQ, said in mid -February that the backward dollar is not an automatic success, criticizing Milei’s idea that the fall of the real exchange rate guarantees stability. “Not all of the TCR is a triumph; it can be a sign of future problems,” he said on Radio with you, warning that the shortage of reserves remains the Achilles heel of the current scheme.
To this is added the opinion of Marina Dal PoggettoDirector of Ecogo, who in a recent interview raised two possible scenarios: one where the government holds the 1% monthly crawling waiting monthly waiting external financing – “Follow it, Trump saves us,” he ironized – and another where the IMF strengths a change before, although he questioned how to leave the stocks without devalue Imports “. “It’s a party while everything remains still,” he warned about current rates, suggesting that the balance is fragile.
The debate on flotation also sneaked into the pages of recent economic reports. An analysis published this week by the Analytica consultancy, entitled “Flotation: Panacea or precipice? “it states that the IMF would be evaluating a flotation administered as a previous step to the exchange unification, but warns that without a mattress of robust reserves – stated at least 40,000 million dollars -,, The experiment could lead to a exchange run Similar to that of 2019. “Argentina does not have the macro conditions for a clean flotation; the BCRA would need to intervene constantly, and with the current reserves, that is an impossible luxury,” says the report, which coincides with Rodriguez’s criticisms about the monetary imbalance and doubts the viability of the recipe in the background in the short term.
Barron’s’s surprise, the only thing that was missing from debate
From the other side of the Atlantic, Barron’s magazine He put the magnifying glass on Milei’s economic experiment in a recent article. According to the publication, the financial markets are applauding the fall in inflation – of a peak of almost 300% annual to less than 85% in January – but the exchange pressure is still too large to not see it. “Milei has cut inflation with a chainsaw, but the next challenge is the exchange rate,” says Barron’s, highlighting that sovereign bonds in dollars rose 10% so far this year, reflecting investment optimism. However, he warns that A sufficient reservations without reservations could unleash a “perfect storm” In a country where the parallel dollar already quotes more than double the officer, a wink to the fragility of the scheme that the IMF seems to ignore.
Barron’s also underlines that Milei’s success depends on maintaining the delicate balance between austerity and growth. “Argentina has surprised the skeptics with their fiscal discipline, but the real test will be to liberalize the exchange market without everything being risen,” says the article. The publication emphasizes that, although Milei has managed to reduce inflation to unthinkable levels a year ago, the social cost – with a consumption in free fall and a recession that does not loosen – could undermine its political support if the flotation recommended by the IMF ends in an uncontrolled devaluation. In Wall Street, says Barron’s, there are those who see Argentina as a risky bet but with potential, provided that the government gets fresh dollars to support any exchange adventure.
In the market, bets are already on the table. Some see an official dollar climbing $ 1,400 for the end of the year If the exchange unification is completed, while others believe that Milei will resist until after the mid -term elections. The truth is that the BCRA, with little net reserves, does not have much room to improvise. The pressure of the dollar, which on Friday resulted in record intervention and a rise in futures, could be the advance of an inevitable adjustment. The flotation, with or without bands, remains a lifeguard in theory, but also a time bomb if expectations overflow.
Source: Ambito
