Dollar: New regime, old problems

The implementation of the new exchange regime and indebtedness with the IMF are reflected that The previous scheme had been exhausted because it did not allow accumulating reservations in the BCRA. The money laundering initiated in August 2024 generated the entry of about 20,000 million dollars that allowed to sustain the exchange appreciation for a few months from the private indebtedness in foreign currency but that mechanism exhausted the Government had to resort to the IMF with an initial disbursement of 12,000 million dollars.

Now, Since the new exchange regime was implemented, the BCRA did not buy dollars in the exchange market and has been forcing the downward exchange rate. The strategy is, as in the previous regime, use the exchange rate to lower inflation, leaving the accumulation of dollars in the background.

For this, the government is hurrying agricultural exports with the threat that in July they increase retentions, promoting a new money laundering from which the dollars could be used outside the system without declaring origin of these funds or paying taxes, and even intervening in the future dollar market.

The problem of using the dollars that enter to appreciate the currency, instead of accumulating reservations is that they are still scarce and will fall from the payment of foreign currency debt, with which the scheme does not seem sustainable. In the remainder of 2025, the maturities borders 10.3 billion dollars and as announced by the Government, disbursements of international organizations for 7.6 billion dollars in that period are expected. The Government seeks to access international debt markets again in the short term, for which a country risk reduction requires. However, historical experience shows that there is no better recipe to reduce the country’s risk than the accumulation of reserves, and the only way to accumulate reserves sustainably is with the purchase of BCRA currencies in the exchange market. A more indebted country that does not accumulate genuine reserves far from improving exacerbates external solvency problems and turns more difficult to return to international markets To face the heavy future maturities, now with the IMF with an thickened account and first in the row to collect in its character as a privileged creditor.

On the side of foreign trade, exchange appreciation discourages exports and stimulates imports. The idea that the current exchange rate is balance because the BCRA is not intervening in the market is inaccurate. To begin with the government, expectations have been influencing other roads, such as intervention in the future dollar. But in addition, the “balance” notion is confusing, because Argentina does not have a single equilibrium change rate. Just as the exchange rate that the agricultural sector needs to be competitive is not the same as the industry, the exchange rate that balances the external current account is not the same in May as in October. Agricultural exports, which explain about a third of Argentine exports, average the 2.5 billion dollars per month between April and September, while between October and March they fall to approximately 1.6 billion dollars per month.

In April 2025, the agro liquidated 2,524 million dollars, which is allowing to contain the dollar even before the partial lifting of the exchange rate. In the coming months, if the liquidation of the agriculture is sustained, the dollar could even lower but what will happen when the offer of dollars is exhausted for the exports of the thick harvest? The demand for dollars is expected that in the second half of the year, both on the commercial and financial side.

Tourism expenditures are in historical maximums, and imports of goods grew by 35% so far this year and continue to increase if the exchange appreciation is supported, the economy continues to reactivate and the government advances with the remove of tariffs to imports. Although the level of activity remains low in historical comparison (the industry, for example, is operating less than 60% of its installed capacity) imports are already in relatively high values ​​as a result of the “reverse substitution” process, that is, replacement for national production with imported products. Beyond the discussion about the short -term sustainability of this scheme, Exchange appreciation and opening process without any planning or productive policy generate deindustrialization and attempt against economic development capacities in the medium and long term.

On the financial level The demand for dollarization in the face of the lifting of the controls seeing being relatively limited, but not despicable. Since April 11, dollar deposits grew by about 1.2 billion dollars and deposits in pesos fell into a similar magnitude, a reflection of the dollarization of savings of human people.

There is still a considerable stock of pesos that could be dollarized at any time. In February 2025 (last data available) deposits in term pesos of human persons were equivalent to the official exchange rate, almost 11,000 million dollars. For its part, the portion of deposits in pesos at the head of the Common Investment Funds (FCI) was equivalent to 12,850 million dollars. While the FCI do not have direct access to the official market because they are legal persons, they are largely anchored by savings of human persons, so, in the face of an worsening of expectations they could be rescued and dollarized.

Historical experience shows that the formation of external assets of human people cannot be belittled. Since 2007, the years in which there were no control of changes The human persons demanded on average more than 10,000 million dollars per year for savings in net terms (expenditures less income) and invariably with controls or without controls The dollarizing drive accelerates in the pre -electoral stages.

In conclusion, The Government is using the seasonality that plays in favor in these months to appreciate weight and quickly reduce inflation, but on the eve of the elections it would be in a disjunctive. The thick harvest dollar offer would have already been exhausted and demand would be greater for imports and savings. In that scenario, will the exchange rate float which would imply an increase in the dollar with the consequent inflation acceleration and economic contraction, or sell dollars to contain the rise, breaking the rule of the exchange scheme and deepening the shortage of reserves? None of the options is virtuous. Wouldn’t it be more reasonable to take advantage of this moment of the year to accumulate dollars, reduce volatility and avoid strong devaluation in the future?

Economist Chief Fide