The Economist Fausto Spotorno, who days ago stopped being part of the President’s Advisory Council Javier Milei, He assured that the Government is preparing the disarmament of the exchange rate trapand predicted what could happen with the dollar once the restrictions on the financial system are lifted. In this regard, he referred to the latest measures taken by the minister Luis Caputo, and the Central bank, in charge of Santiago Bausili.
Spotorno explained that the government “is trying to intervene in the exchange rate gap” so that it falls as a way of preparing for an eventual lifting of the exchange rate restrictions. What would happen next with the dollar? A jump could occur.
“If at some point you want to get out of the exchange rate trap, what you need is for the gap to be as small as possible”so the Government needs to return to the numbers from the beginning of the year, when the gap was close to a minimum of 15%. For the analyst, “that may be more important than having reserves”, since, when the Government tries to get out of the currency controls, it will seek “that the impact on the dollar is as small as possible”.
He also estimated: “If the exchange rate jumps a lot after the currency controls are lifted and you want to contain it, you would have to have reserves, but it is preferable that it jumps little.”
For the analyst from the OJF consultancy, the latest measures of the Government point in this direction to get out of the currency controls. This is due to the fact that the economic team announced a plan to stop the monetary emission, while the dollars that the BCRA buys in the official market will be sold at the value of the CCL.
Besides, The Government offered banks the possibility of cancelling the puts, that is, liquidity options on public securities, by exchanging them for a new liquidity bill, the LEFI.
This is why, for Spotorno, these measures are a sign from the Government that “it wants to get out of the trap”, even if it is a matter of regulating the artificial gap.
He also considered that the recent rise in parallel dollars is the result of “volatility” rather than a market correction. In his opinion, at some point dollars will have to be put on the market if a possible currency run is to be stopped.
According to his reading, and following what Caputo specifically said, Spotorno understands that “whatever comes in in the future will be used, and that this would not imply a loss of reserves that you already have as long as the reserves grow, which is what is called into question when one sees the flow of debt in the future.”
In this scenario, the economist believes that this is what worries the market, since “there is still no clarity” about the path that the Government would follow to begin to eliminate restrictions on the exchange market and where the reserves would come from to cover the next debt maturities.
“We don’t see that many reserves can be accumulated between now and the end of the year,” he warned in statements to Radio Rivadavia. However, he also pointed out that the Government has mechanisms to regulate this, such as, for example, “limiting imports a little.”
Source: Ambito
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