The government is committed to revitalizing an economy that is in a deep recession, while striving to reduce the gap between the official dollar and the blue dollar with the aim of raising the exchange rate trap.
This week, the Central Bank (BCRA) surprised the market by announcing a new step in the relaxation of the restrictions on financial dollars within the framework of its ultimate goal of eliminating all restrictions. Specifically, it decided to allow people who had received some help from the State during the pandemic or who benefit from subsidies for the consumption of public services to carry out foreign exchange transactions through securities in foreign currency, that is, to buy both MEP and CCL dollars.
While the market welcomed the announcement, some doubts appear on the horizon which could disrupt the complete release of exchange restrictions. However, it should be noted that the City considers that any measure that goes in the direction of deregulation “is positive.”
What Miguel Kiguel’s consultant said
In this context, Econviews, one of the most influential consulting firms in the country, shared its expectations in a recent report. The analysis addresses both recent industrial results and the delicate exchange rate situation that the Central Bank has been facing for more than a month.
Miguel Kiguel’s consultancy maintains that, although they do not identify themselves as strict defenders of an appreciated exchange rate, they recognize that a A cheaper dollar could be a favorable consequence of deep economic reforms.
“We were never fundamentalists of the exchange rate, nor will we be now, but an appreciated exchange rate is a necessary evil when things are going well. That is to say, if in the future we make all the micro and institutional reforms, productivity increases and investment flourishes, we will deserve a cheap dollar,” they explain.
Despite this outlook, they also point out that the current dollar is undervalued, which, together with a salary that is not excessively high in dollar terms, preserves business margins. However, they warn that The exchange rate lag limits the attraction of investments in tradable sectors.
Regarding the microeconomic reforms announced by the Government, the consultancy firm stresses that although a positive impact is expected, the effects of these reforms will not be immediately reflected in economic activity in the coming months.
“The economic activity situation in Argentina remains very precarious. May brought some positive news, but we need more evidence before adopting unreserved optimism,” they say in their analysis, which also highlights the year-on-year deterioration. Among the sectors that have shown signs of improvement are construction (+2.6%), commerce (+0.85%), hotels and restaurants (+1.7%), financial intermediation (+2%), agriculture (+1.6%) and transport (+1.4%). However, the consultancy warns that these numbers may not be sustainable because they compare with the minimum in April.
Finally, Econviews expresses cautious optimism, noting that, although the forecasts are encouraging, they do not suggest a quick recovery.We have good vibes, but it won’t necessarily be a straight line.. In June, it is not clear whether activity has continued to improve, given that the month has particularities in terms of holidays that the measurement systems do not accurately capture,” they conclude. According to current data and optimistic forecasts, the economy could fall a few tenths less than the base scenario of a 3.6% contraction.
Source: Ambito
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