The President of the Nation, Javier Milei, states that we are not facing a backward dollar, but rather a rearrangement of prices.
President Javier Milei spoke once again about the dollar and the crawling peg -the devaluation rate of 2%- and denied that there is an exchange rate delay as some voices in the market claim. Furthermore, in his message on social network X he reviewed the 5 main points of his economic plan.
The president stated in his tweet that one cannot speak of exchange rate delay without taking into account the context and considered that, taking into account a series of variables, what is seen in the economy is, more than a late dollara rearrangement of relative prices.
“While it is impossible to know the deep parameters (preferences, technology and endowments) for all of humanity in the present and the future, so only by chance could a human being determine the equilibrium price vector and by talking about the detour, at least briefly we could ask ourselves if a certain policy framework implies a path in that direction,” the president said on his social network.
Exchange delay vs. rearrangement of relative prices: the variables that Milei evaluates
The president points out that this must be evaluated taking into account some points:
- Financial surplus in the treasure
- Monetary base constant
- Gap almost zero, with net reserve purchases
- Sanitation of the balance of the BCRA
- Lifting restrictions in the exchange market every day until one day we finish leaving the market. stocks.
And it suggests that, taking these variables into account, it is valid to ask if we are really facing a case of exchange appreciation or if it is a rearrangement of relative prices where Argentina is expensive in dollars given its fiscal and regulatory structure that the country has.
The market’s criticism of the crawling peg
It is worth remembering that one of the proposals that different city analysts make about the Milei-Caputo plan is that it should accelerate the crawling peg so that the exchange rate does not lose competitiveness and they propose that this will encourage foreign trade.
“The overshooting of the devaluation of December last year cost the Government too dearly in terms of inflation to waste it.” not accelerating the crawl and letting the official dollar is too far behind“, economist Daniel Artana recently diagnosed within the framework of an event on financial issues.
Source: Ambito
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