Despite the recent rise, has the dollar been beating inflation this year? Not at the moment, although everything seems to be happening soon.
Since Alberto Fernández took office, how was that race between the “free” dollar and inflation?
If we analyze the accumulated since Alberto Fernández took office, the dollar rose approximately 240%. Instead, inflation totaled 178%.
In this graph you can clearly see the dynamics of 2022. The distance between the two was shortening as the dollar was falling and inflation accelerated. However, in recent weeks you can see how the green line (dollar) gained momentum and took advantage again.
Central Bank measures
Faced with the impossibility of expanding international reserves and in the context of high energy import costs, the BCRA had no other choice but to take drastic measures. As usual, new restrictions and prohibitions were added.
Basically, The goal is for companies to finance their imports with their own dollars, in order to “take care” of the few dollars that the country has. The aim is to prevent companies from importing speculatively, taking advantage of the value of the official dollar, which is worth more than half that of “free” dollars.
This is a new trap, a measure revered by the ruling party. Obviously, it had immediate consequences: since practically no one could access the official dollar to import, the BCRA was able to accumulate more reserves. It bought USD 150 million on Tuesday the 28th and USD 580 million on Wednesday the 29th, which implies a record since 2016.
Is it to celebrate? Clearly not, since they applied a “turnstile”, in which almost no one can access the official dollar. Bread for today, hunger for tomorrow. Undoubtedly, this new trap will have negative economic consequences, beyond the fact that, in the immediate future, the BCRA can rebuild its reserves.
What happened in the free markets, after this measure? Country risk set a new record and the price of the dollar soared.
Can the dollar calm down? It’s a possibility, of course.. It might take a break in the short term, but then it will continue to rise. Just look at the inflation and emission figures.
It is worth noting the following data: in June the BCRA issued $825,000 million, which implies higher future inflation and an assured dollar rise. In addition, the stock of remunerated liabilities (mainly Leliq) exceeded $6 billion, so it will have to accrue almost $4 billion in annual interest. Nice snowball, right?
How far could it go? At a minimum, and to match this year’s inflation, the Settlement Cash dollar could reach $275 in the short term. And by the end of the year it should easily exceed $300, if we factor in projected inflation.
The picture is terrifying on all fronts: economic, financial and political. The dollar is overheating and all the ingredients are in place to keep it flying.
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Source: Ambito
