They claim that the flotation plan between dollar bands replicates elements of Israeli success: the three differences that can complicate the result

Faced with the growing devaluation expectations, and within the framework of negotiations with the International Monetary Fund (IMF), in mid -April the Government discarded the questioned “Crawling Peg” of 1% monthly to give way to a new Flotation Bands Regime. It implied an initial increase of almost 9% in the official exchange rate.

The wholesaler came to accumulate a remarkable appreciation in the previous months, which began to be reflected in the deterioration of the Central Bank’s current account (BCRA). The cheap dollar generated the conditions for a higher tourism deficit, as well as fed imports, together with commercial deregulation and openness measures.

The similarities and differences with the successful case of Israel of the late 80

A report from the Political Economy Research Institute (IIEP) of the University of Buenos Aires (UBA), prepared by Joaquín Waldmansaid that “Phase 3 of the stabilization plan has similarities with the one implemented in the 1985 Israeli disinflation“, since, in that case, after an initial period of exchange fixing (in the Argentine case it took the form of” crawling “limited), which led to an important disinflation, a band scheme was chosen (in January 1989) to make the exchange market more flexible and avoid excessive appreciation.

However, the aforementioned work remarked that “There are at least three important differences”. The first is the breadth of the band; While in Israel the fluctuation range of the exchange rate was 6% (measured with respect to the average value), in Argentina movements of up to 33% are allowed compared to the $ 1,200 centrals.

The second difference mentions initial inflation levels Since Israel applied a band scheme after lowering inflation from 400% per year to 20%, when in Argentina the March Consumer Price Index (CPI) registered a variation of more than 50% compared to the same month of 2024.

Finally, the IIEP stressed as a data not less than the INITIAL CANKETER LEVEL. In Israel the exchange rate was appreciated about 16% between the start of the plan and the end of 1988, while at the local level the appreciation accumulated 34%.

“These differences imply, together, that the BCRA will have more difficulty buying dollars on the band of the band That in the Israeli case, for the lowest real value of the dollar, the greatest distance between the spot and the band of the band and the fastest fall of said floor (for greater inflation), “said Waldman, economist and researcher at CONICET at the Center for State and Society Studies (CEDES).

The specialist warned, in dialogue with Scope, that, in general, stabilization plans usually have two major risks: the relaxation of fiscal consolidation due to excess confidence in the initial disinflation and the External Front Problems derived from exchange appreciation which usually occurs (although in different magnitudes) in the countries that carry out these programs.

The latter is the most latent risk for the domestic case, according to Waldman’s gaze. “The new band scheme represented an opportunity to reverse the appreciation And it had a double benefit for the government since, as the upper band implied a higher real exchange rate, it could afford to buy currencies inside the band and at the time the dollar rises. “

“On the contrary, it is being forced by intervention in futures that the exchange rate falls, aggravating the problem. Israel while having exchange bands could accumulate reservations. The Milei government, refusing to buy currencies, is likely to accumulate reservations and spend some time with a highly appreciated exchange rate, without strengthening the external position. “

In this regard, the head of the Outlier consultant, Gabriel Caamaño, He said that the non -accumulation of reservations is a “transient” decision of the ruling party that responds to the “political objective” to reach the legislative elections of October with a disinflation. Taking into account the obligations of debt payments from 2026, and that this year the reserves will fall if the BCRA does not buy currencies in the official market, the economist said that both the treasure and the central, will have to access the market of changes in the medium term.

Intervention in the future dollar, at the service of disinflation

Despite the initial adjustment in the value of the currency, after the flexibility of the stocks, andThe ruling party continues to have the exchange rate as a fundamental pillar in pursuit of its objective of retaking the disinflation pathinterrupted in February and March. Consequently, in the last days the dollar systematically quoted closer to the band of the band ($ 1,000) than of the ceiling ($ 1,400).

Regarding the intervention in the futures, on Wednesday of Last week many market economists and operators enforced extremely strange movements in the ROFEXwhich led to a drop in contracts of up to 10%. The operated volume reached US $ 4,240 million, the highest value since July 29, 2022.

In the market they interpreted it as a Coordinated action between the Government and the BCRA so that the decline of the futures is replicated in a spot price.