President Javier Milei The government is moving forward with phase two of its economic plan, with measures that seek to keep the monetary base under control, within the framework of the strategy to reduce inflation. Surprisingly, this Saturday morning it announced a change in dollar operations in the Single and Free Exchange Market (MULC). He also anticipated that this week they will resolve the issue of the “puts” and downplayed the exchange rate tension of recent days, which led the blue dollar to trade at $1,500.
From the United States, where she is traveling to attend a summit with billionaires, Milei explained that a new monetary scheme will begin on Monday in an attempt to achieve “total zero emissions.”
He explained that the pesos issued by purchasing dollars in MULC will be “sterilized” by selling dollars on the market. In this way, he said, the “tap” of pesos will be closed from the sale of foreign currency on the external front. In this way, pesos will not be issued to cover these operations.
In an interview with LN+, the President explained: “Going from zero excess supply to zero emission also implies cutting the emission through the purchase of dollars. We buy dollars and inject pesos and what we do is sterilize the pesos by placing dollars in the market and in this way we ensure that the amount of money remains constant. This means that from now on the monetary base in Argentina will not grow any more.”
The measure should have an impact on the exchange rate of the dollar settled, and the Government is sending a new signal to the market to rule out a devaluation. Officially, the strategy is to maintain the crawling peg at 2%, and to bring it into line with inflation, which is still above 4%.
Minutes later, the Minister of Economy, Luis Caputo, He gave details in X: “From now on, the amount of money will remain the same or will be reduced (if the Central Bank were to sell dollars in the Mulc). That is, if the Bcra were to buy dollars in the Mulc, the equivalent issuance of pesos will be sterilized with the sale of equivalent dollars in the cash market with settlement. This deepening of monetary policy that begins the day after tomorrow will contribute to deepening the process of disinflation.”
Milei also said that the issue of “puts” will be resolved on Wednesday. These are financial derivatives that the Central Bank offered to financial institutions to encourage them to buy public sector debt in pesos. In this way, financial institutions are assured of a price and liquidity if they need to get rid of the securities.
On the other hand, he downplayed the rise in the dollar on the parallel market, saying that “there is no panic” after it reached $1,500. He also explained that September and August will be months of exchange rate pressure due to the need for dollars to cover energy costs, a product of weather conditions.
Source: Ambito
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