The president of Central Bank of Uruguay (BCU), Diego Labatreferred to the first economic measures announced by the government of Javier Milei in Argentina, and pointed out that they understand them as “the beginning of a certain macroeconomic ordering for the neighboring country that can have positive impacts on Uruguay.
Through a video broadcast at 7 p.m., the Minister of Economy Luis Caputo He communicated the first ten economic measures of the Milei government, an “emergency” package aimed at reorganizing the public accounts of what he characterized as “the worst legacy in history.” From Uruguay, different sectors commented on their opinion on the announcements that included a 118% devaluation of the Argentine peso, elimination of the import authorization system (SIRA) and the cutting of subsidies in transportation and public services.
“We monitor Argentina always, it is a country clearly very relevant for Uruguay. In principle we saw this package of measures as the beginning of a certain macroeconomic order. Of course, we are cautious, and we have to look at the reactions, look how is it evolving“, considered the president of the BCU, Labat, in statements to the press, thus joining those who expressed themselves about the Argentine economic present.
Asked about the impact that the measures may have on Uruguay, The leader assured that in the short term no major changes will be seen. “What we are going to begin to see is a macroeconomic order. They are going in a good direction: in the fiscal order, in the ordering of the exchange market,” he added.
In that sense, Labat pointed out that the economic package announced by Caputo can help lower inflation and other “problems that end up impacting the Uruguayan economy”, such as the exchange rate difference – from the devaluation and a progressive exchange rate unification— and the obstacles to Uruguayan exports with the elimination of SIRAs.
On the subject of dollar, The president of the BCU did not consider that the strong increase in the price in the neighboring country could have a correlation in the local exchange market. “It has been a long time since exchange rate movements have had much impact on Uruguay, “It doesn’t seem like it was going to happen,” he said. However, he said that we will have to see “how the markets react” in the first days after the announcements.
Devaluation, a signal to reduce the exchange gap?
The 118% devaluation announced by Caputo yesterday and effective as of today in Argentina will inevitably have an impact on Uruguay, especially considering that the exchange difference between both countries—a cheap dollar in Uruguay and a Dolar blue or expensive parallel in the neighboring country—and its effect on the local commercial, industrial and tourism sectors.
Diego Rodríguez, managing partner of Gastón Bengochea, held in dialogue with Ambit that, in principle, the effect in the country of the measures in Argentina could be positive. “Beyond the exchange rate, the acceleration in prices is being so strong that a normalization process in terms of prices is beginning,” said the economist and, regarding exchange difference, predicted: “The Argentina cheap that we saw before the first round has begun to end, we are in that process.
With respect to blue dollar, Rodríguez He reviewed that in the neighboring country the exchange rate “basically because there are no dollars to meet the demand for the greenback by Argentine citizens” and warned that “the blue market will continue to exist because it remains the only one open to offer or take dollars at a premium over the official one.”
Regarding the behavior of the exchange rate in the parallel market, he pointed out what will happen during the first day after the announcements: “We will see what reaction the Cash With Settlement (CCL) and the blue to the measures”. Personally, he considered that “there could be an initial overshooting of the exchange rate and then a downward correction.”
Source: Ambito
