Various economists expressed their opinions regarding the announcement made by the president Javier Milei with key changes in the official dollar market, and beyond some uncertainty, they pointed out that the central objective of the Government will be to attack the exchange rate gapwhich today is around 60%.
One of those who spoke out is Fausto Spotorno, who recently left the President’s team of economic advisors. “Is the exchange rate gap closing coming? The ground is being prepared to get out of the currency exchange restrictions and normalize the economy. Because it means intervening in the exchange rate gap”he said on social media.
“The objective of keeping the exchange rate gap under control at around 50% is above the goal of accumulating international reserves and doing homework with the IMF. It is not a minor decision. We will see how it turns out.”Claudio Caprarulo, from the consulting firm Analytica.
Christian Buteler added on X: “Far from seeking a free exchange rate, there is increasing intervention, given that now the BCRA is SELLING dollars in the CCL (highly criticized, and rightly so, during the previous administration). Why not just run away and let the price be determined by supply/demand?”
Daniel Osinaga, on the same social network, wrote: “Those who bought dollars are veiled. What is happening with the Reserves? In my opinion, they have already secured a lot of money from abroad that is coming in. Otherwise, you don’t dare make that announcement.”.
For Gustavo Neffa “This changes things. Caputo announcing that the issue of bonds for the purchase of dollars (the real explanation of why the monetary base is rising) will be neutralized by the sale of dollars in the implicit dollar market CCL. Aiming to close the gap”.
Meanwhile, Salvador Vitelli, from Romano Group, said: “This is aimed at reducing the gap, but at the same time that it is reduced, the net purchase tends to zero, taking the BCRA out of the exchange market”.
“If the objective of accumulating reserves loses priority and the BCRA is also going to sell in the gap, the bond market will not take it well on Monday”predicted analyst Amical Collante.
Javier Milei’s ads for the official market
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).
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.
Source: Ambito
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