Between shadows and numbers: from Wall Street they warn for the cost of the Big Mac and the exchange rate

While the government tries to dissipate fear of a devaluation imminent and highlight the advances linked to the Monetary Fund, Wall Street investors They continue to observe risks in exchange policy. This was concluded by Morgan Stanley, after an investor delegation travels last week to Buenos Aires to dialogue with authorities, politicians and businessmen.

In the report, the American bank said: “We return from Argentina more optimistic about the continuity of policies. The economy rebounded faster and more force than expected“

It also emphasized: “The opening of the capital account remains a key risk. A Big Mac in Buenos Aires has a price close to New Yorksolve it No It is causing easy. “

This analysis revived the debate on the management of the exchange rate. The January measurement of the Big Mac index positioned Argentina as the Latin American nation with the most expensive hamburger and the second worldwide, only surpassed by Switzerland. According to The Economist, This shows that the Argentine weight is overvalued approximately 20%.

This look coincides with that of the former Minister of Economy, Domingo Cavallowho pointed out in this regard: “However, this strategy generated a real appreciation of the weight that affects the competitiveness of exporters, the agricultural sector, industry and services. The current appreciation, estimated at 20%, It is similar to that recorded in the last years of convertibility and could generate recessive effects. “

The cost of Big Mac

The index has become the centers center exchanges between political figures. On the one hand, Axel Kicillof used the indicator as proof of the “backwardness” of the dollar, arguing that, if not so appreciated, Javier Milei could lift the stocks and cease in his market interventions. In response, the president said the dollar “It is not late “which will not be devalued and described those criticisms of “imbecilities.”

In this context, Morgan Stanley released a report, entitled “Conclusions of the trip to Argentina: mostly positive, although with some challenges”, which Clarín accessed. The publication coincided with sudden movements in the market: the Merval index collapsed 5%, the dollar bonds fell to 2.3% and the country risk climbed to 710 points.

The delegation, headed by Fernando Sedano, chief economist of the bank, held meetings last Wednesday with Guillermo Francos, chief of cabinet, and is presumed that he had similar conversations with the team of Luis Caputo. This visit occurred in the middle of a change of perspective on Wall Street, where the viability of reaching an agreement with the IMF and eliminating short -term stocks is increasingly uncertain.

Although the New York financial giant projects a 2025 “promising” – since “many business leaders believe that growth could surprise upwards, especially with regard to bank credit and consumption” – it is stressed that “it is difficult to evaluate the Cost that policy responsible must pay for exchange policy. “

The report also stressed that:

“Argentina needs investment more than consumption. The excess of spending was the problem first. It is difficult to promote investment when the exchange rate remains a risk factor. “

It was also concluded that: “There could also be a price to pay later if the devaluation becomes the solution. The cost could be both monetary and political, in terms of support. “

Since last year, Wall Street banks have expected the flexibility of the stocks and exchange unification. Currently, Morgan Stanley predicts that the “blend” regime could be eliminated in the second quarter and that an initial disbursement of US $ 5,000 million by the IMF would help compensate for the current account deficit derived from the appreciation of the weight and the resumption of Import payments.