In the midst of the uncertainty experienced by the markets after the good results obtained by the La Libertad Avanza candidate, Javier Milei, the Argentine Central Bank made the decision to devalue the official currency by 22%.
He Central Bank (BCRA) raised the official exchange rate to $350 after the results of the PASO and until the October 22 elections. The monetary entity made the decision to devalue 22% the official coin, In the midst of the uncertainty experienced by the markets after the good results obtained by the La Libertad Avanza candidate, Javier Miley.
With this exchange rate adjustment, the retail dollar at Banco Nación was at a sale price of $365.54. At the same time, the quote equates the official dollar to the so-called “agro dollar” that was arranged weeks ago to encourage exports.
The measure was announced in advance of theto the opening of the markets, where a strong rise in the blue dollar was anticipated. At the moment, no other measures are known. The exchange rate update was one of the IMF requirements to approve the disbursement of US$7.5 billion.
“The government’s weakness is beginning to materialize. Unfailingly, this government started with the monetary adjustment that Argentina had to face. My vision is that it will not be maintained until October 23 official dollar at $350 since it is not equilibrium price yet. It will need more adjustment. Now it is essential to see how the Fund’s link with Argentina will be. Let’s remember that after 2019 passed with the liquefaction of Macri’s power, the Fund decided to run and wait to talk with the new economic team. Difficult to know in the short term there will be a lot of volatility. There you can produce overshoot. That from our consultancy we do not rule it out,” says Alfredo Romano, Director of the Romano Group consultancy.
At the same time, the monetary authority led by Miguel Pesce it also raised the reference interest rate by 21 percentage points, taking it to 118% in order to absorb pesos in the market. According to the official communiqué, it is understood “advisable to readjust the level of interest rates of the monetary regulation instruments, in line with the recalibration of the level of the official exchange rate”, it was explained by BCRA statement. “This, in order to anchor exchange expectations and minimize the degree of transfer to prices, tend towards positive real returns on investments in local currency and favor the accumulation of international reserves,” he said. The effective rate climbs to 209%.
“The wholesale dollar is for which most of the operations are made, it is evident that it has made a strong rise in the retail and as a consequence to all the others to decrease the market demand. They do not affect the prices of the services that are marketed so much”, analyzes Aldo Abramin dialogue with Ambit.
Source: Ambito
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