Javier Milei reiterated that he will not devalue the weight: “The country should be on its way to a much more appreciated currency”

The Liquidation by retentions and “Crawling Peg “; the BCRA interventions and the Import deregulation: the monetary policy It was the obsession of the national government in the first month of the year and the dollar value It transcended the role of exchange anchor to become a backbone of the management. That is why, in the midst of the country’s negotiations with IMPJavier Milei He referred to the exchange rate at present.

The president of the Nation considered reasonable the value of the national currency because “Argentina is a net creditor of the worldwhich is why the country could live with permanent deficit within its intertemporal budget restriction “and pointed to the energy, miners and agricultural sectors. That was the reason why it ratified that its administration not only will not devalue, but that”Given such an wave of dollars, the country should be on its way to a much more appreciated currency “.

“Moreover, given the fall of the country risk observed since LLA won the elections, to the extent that the international interest rate falls under domestic, I should not surprise that the country goes to a negative checking account. Is it to fear? Given the fiscal balance, the president continued his analysis, who pointed out that when “the real exchange rate begins to fall, just like a scratched album, economists begin to give alarms of exchange delay without even considering the case of a appreciation of weight “.

In addition, he indicated that if the money supply is contracted by fiscal surplus simultaneously to the recomposition of the demand for money and the growth of the economy, “The dollar not only has no monetary fuel to climb, but quite the opposite, Since in fact they are missing and pesos will be missing as the months pass. “The Government will not devalue to save their clients at the expense of the pain of the Argentines of good. “

Javier Milei, against the methodology of economists

The president listed “a series of serious methodological problems” of economic experts. “No one can determine the intertemporal general equilibrium price vector from which the statement is derived from the exchange rate is latesince its calculation implies knowing the preferences, technology and endowments, both of the local economy and the World Cup, and not only in the present, but also for the future, “began its reflection.

Then he stated that “in an attempt to correct this difficulty, Economists usually resort to averages as if there was a process of reversion to the averagewhich would imply that the deep parameters do not change over time “and that” the starting point of the series is not trivial, where the Adalides of exchange delay usually start the series from the exit of convertibilitya period characterized by violation of property rights that leads to the systematic depreciation of the currency. “

“Therefore, If convertibility is considered, the real exchange rate falls “he pointed out and understood that “during the periods of wild populism the real exchange rate is above the average, while in moments of trust it does it below.”

Exchange rate: historical development

Taking the Argentine financial future, Javier Milei highlighted three patterns to face the Fiscal deficit. Chronologically, in the economic management of the Civic-military dictatorship “He was financed with the issuance of money and was sterilized with a growing interest rate […] While inflation persists high “; in last Peronist governments “The origin is the fiscal deficit financed by monetary emission, which, when putting pressure on the price level, it is tried to correct setting the exchange rate, whose result is a loss of reserves”; and in the presidency of Mauricio Macri “The fiscal deficit persists, but it is financed with external indebtedness, which, under a flexible exchange rate, drops the price of the dollar and this overcome the exchange rate.”

“Naturally, under the current model There is no fiscal deficitfor that reason It is not necessary to issue To finance the treasure, Inflation is decreasing, the gap is in historical minimums and reserves have increased, So we are not facing the Kirchner case, “the president continued his reflection, who differentiated himself from macrismo because” the consolidated debt of the national state has fallen into more than US $ 30,000 million “and the civic-military dictators It emits money to finance the treasure and, therefore, there is no need to sterilize the money that has not been created. “” Under this analysis there is no exchange delay, “he concluded.