City guru predicted what could happen to the dollar and when the exchange rate will be released

In the middle of the pax exchange and with the official exchange rate as well as backward parallels, the dollar guru Christian Butler referred to the official exchange rate and its loss compared to inflation after the megadevaluation as well as a possible exit from the stocksbut it would not be abrupt like that of 2015 during the administration of Mauricio Macribut it would be “in parts.”

Inflation, the mother of all economic problems

The gain that the official exchange rate had after the devaluation in these last four and a half months was lost in the face of inflationary acceleration. In this context, the economist pointed out that he is already below the levels of 2023 (when the former Minister of Economy devalued Sergio Massa) and even from 2015 when Macri left the stocks and from January 2014 for the devaluation of Axel Kicillof (today governor of Buenos Aires, but at that time head of the Treasury Palace). “Back we are losing competitiveness with commercial partners,” explained Buteler in dialogue with the program Best bidder of AM With You.

However, he clarified that this is not due “only to the value of the dollar,” but because inflation “didn’t go down fast enough”. “If devaluing would solve the problems, Argentina would have to be a power like it is today. Here it is no use devaluing again, if there is no program that stabilizes prices, like you didn’t have it in these four months. You are going to devalue and the same thing is going to happen,” said the economist.

In that sense, Buteler criticized the megadevaluation, which raised the official exchange rate to $800, when the market saw it as logical at about $600/$650. “I take it $800 so I can buy time and use it as an exchange anchor to stabilize prices and lower inflation,” the economist postulated, but he reproached: “Today, four months later, inflation is at 11%, just 2 points below the worst figure from the previous government”.

When would he be released from the stocks?

Besides, Buteler predicted that the release of the stocks would only arrive in the second semester, but that it would not be abrupt, but “in parts”. Along these lines, he analyzed that the exit from this restriction would occur because The Government seeks to return to the voluntary debt market in 2025 for renew expirations what does it have and for that needs to lift the trap. “It was what he promised to foreign private funds,” said the economist and, in addition, attributed the strong rally of foreign securities to this promise.

Along these lines, he added: “The Government had to lower the country risk to 700 points and the United States also lowered the rate to end up having an output of more or less 10 points, so – the private funds said – let’s buy now that we are going to win in the bond regularization and that did the self-fulfilling prophecy: the Bonds had a nice rally in these four months, so we have to get out of the stocks“.

Now, the stocks It also generates revenue with the COUNTRY taxIt is even the fourth tax with the highest collection in Argentina. Therefore, the exit is not so simple, since there will be a significant drop in collection and income. “But you have to get out of the trap no matter what”he assured.

“I think the best time to get out of the trap is now.when you have one gap very small because the impact would be less, but it is delaying it too much. It will end up coming out in the second semester and it will do it in parts“said Buteler and added that he does not observe an intention on the part of the Government “to completely release the stocks as it was in 2015, but rather to gradually introduce regulations”.

From this removal of regulations, according to Buteler, the Government will observe how the market reacts to “have some type of waistline to be able to handle what happens with the exchange rate.” However, he warned that The longer it is delayed, the greater the impact will be..

“Today the dollars are stable, but I honestly see this stability as quite inconsistent. I do not believe that a stable dollar can be maintained with inflation that in the last four months was 90% while the exchange rate rose barely 20%. Sooner or later, the gap that was created between inflation and the dollar will have to be narrowed.. So, the longer it takes for the stocks to come out, the stronger the impact on the recovery of the dollar,” he concluded.