Dollar: for the gurus, Argentina is on the way to “dollarization” and they warn of falling salaries

For its part, the political level is faced with a difficult situation after the failure in Congress treatment of the so-called ‘omnibus law’ that gave broad powers to the Government and allowed privatization of state companies, among other points.

“As the Government faces the challenge of “uncover the pot” of regulated prices, sincere repressed inflation. As is normal, the pockets suffer from it. The wages, punished by 12 years of stagnant activity (and falling productivity), received an additional blow due to nominality. So, They chained another year with losses in purchasing power“said GMA Capital Research.

“After two months of the new monetary policy implemented by the new government, it is interesting to wonder about the effects on the balance sheet of the central bank (BCRA) and the possibilities of lifting of the stocks in the short term“, estimated Delphos Investment.

He added that “the “liquefaction” through persistently negative interest rates and the exchange rate appreciation as a result of the crawling peg at 2%. Questions about the sustainability of the appreciation will begin to grow as the second quarter and the liquidation of the thick harvest approach.”

““I believe that the government is in the preliminary stage of its dollarization path.”Ricardo Delgado of the consulting firm Analytica said in radio statements.

Market sentiment: How assets react to economic policy

“Fiscal balance is the necessary condition to be able to achieve a more or less credible and reliable stabilization path. The ways and how these objectives are reached is part of the differences that may exist between a stabilization program more classic and a dollarization, which implies trying to absorb the greatest possible amount of market weights“, he pointed.

“The market has given a first step of hope to the official financial schemebut subject to being able to overcome the political and social storms”, estimated VatNet Financial Research.

“Although the bonds have been traded with considerable volatility, the correction of the fall in inflation expectations would already be contemplated in the price of the assets“said AdCap Grupo Financiero.

“This market perspective has been falling since the second week of January when high-frequency indicators began to appear lower than expected. Likewise, the 20.6% inflation in January did not represent a surprise and today it is discounted 15% for February, according to the survey of private consulting firms,” ​​he added.

Inflation and foreign trade: why things can get worse

“Argentina’s president, Javier Milei, has made combating runaway inflation a key priority, but the historical record in Latin America suggests that when inflation reaches such high rates it can take its own life“Capital Economics said. “Things can get worse before they get better”he estimated.

“The external sector will show (in 2024) a positive dynamic, with a comfortable trade surplus expected at the aggregate level in a context of rising exports and falling imports,” estimated the consulting firm ABECEB.

“With Brazil will undoubtedly see some months of surplus -until mid-year at least- Although then it would slowly converge again to the structural deficit situation in the second part of the year, although probably closing the year, on average, slightly positive,” he noted.

* “It is possible that The government has overestimated the stabilizing power of agrodollars for the current campaign. In reality, the contribution of agribusiness to exports would reach 34.7 billion dollars, according to the latest estimate by IERAL of the Mediterranean Foundation.