Dollar effect: how Sergio Massa’s measures will affect exchange rates

For two weeks, the official dollar has been fixed at $350, after the devaluation that the government applied after the Mandatory Simultaneous Open Primary (PASO) electionsand for that 22% jump, the Government took a series of measures, which, like any economic provision, has its effect on the price of the US currency. But to what degree do they influence and how?

As he points to Ambit the economist from the University of Avellaneda Pablo Ferrari, “the announcements point, broadly speaking, to two more or less defined social sectors: on the one hand, wage earners, monotributistas and retirees, in order to provide them, fundamentally, a income recomposition after the last devaluation and, on the other, to agricultural sectors, so that they can recover from losses” caused by the drought and exchange news.

In the first case, Ferrari considers that, although a part of those extra income announced, with bonuses and salary supplementsyou can go to the dollar to protect its capital from inflation and devaluation, due to a matter of economic capacity, it is expected that “the incidence of benefits to those sectors in the purchase of dollars, at most, will be marginal”.

Blue dollar: marginal effect

Also, it is to be expected that extra flow of pesos turn more towards him Dolar blue than to other exchange rates. Consequently, the upward pressure that they will exert will be felt mainly in that market, which is illegal and marginal, although quite relevant in terms of public opinion.

Thus, although in recent times the price of blue by pre-election coverageand this Tuesday it rose $13 to $750, could continue to move upwards in the coming weeksas the announced bonds are paid.

But, on the other hand, Claudio Caprarulo, director of Analytica, maintains that “there are two ways in which ads can impact the dollar: one is the real channel and the other, the financial one”. He maintains that, in the first case, the pesos that are being injected, as long as it is to the low-income sectors mainlyshould go to cover basic needs, so it should be a effect with low impact on the exchange market.

Financial dollars: how does it impact?

Meanwhile, Caprarulo foresees that, due to the financial channelthe Demand for the purchase of blue dollars or MEP may be driven by subsidized borrowing which was launched “This does seem to me the most relevant channel,” she warns.

Consequently, with regard to the benefit for the agricultural sector, Ferrari considers that, “in many cases, the beneficiaries of these programs they will tend to look for how to buy dollarsputting pressure on the exchange rate in one way or another”.

In the same sense, the economist and director of EcoGo, Sebastián Menescaldi, points out when he says that carrying the zero withholdings will not have great effect on the dollarbut, yes, he considers relevant “the fact that 25% will be available to buy inputs in the soybean sector abroad”.

And it is that it indicates that “the 25% that they have available for purchases abroad they will be able to bring it via dollar CCL to the country and that will allow positively influence the gap”. Joel Lupieri, from Epyca Consultroes, also explains that “the start of a new export program, seeking greater currency settlement, implies put pressure on the meager reserves of grain that seem to remain”, on the one hand.

This is due to the fact that a part of the dollars to be settled may be used to pay for the importation of soybeans for replanting, which will have a negative effect on the reserves of the Central Bank (BCRA).

Likewise, it does not rule out that this probably has certain correlate in the price of the stock market dollarsas long as the exporters they can liquidate up to 25% of their sales to the CCL. “The greater presence of selling points could partially appease the exchange rate tension that has been generated in the last weeks after PASO”, says Lupieri.