Crisis is opportunity. But Opportunities only appear for the true “visionaries” and who know how to be informed about economics and finance. Invest time and money in financial educationis used for these things, for example to know how to earn money without putting money or to protect the purchasing power of capital in a scenario of rising inflation.
Today I am going to analyze the comparison between consumer goods, the dollar and inflation, in order to reach conclusions about what type of financial decisions a person can make today to preserve their purchasing power.
What is happening with consumer goods and exchange goods?
On the side of consumer goods (example: technology, household appliances, furniture, cars, etc.) they have been increasing in price after confirming the CPI data month by month and due to greater promotion of the now 12 program in order to boost consumption to sustain the economy. On the exchange goods side, the merchandise that the merchants keep knows that by applying a “wait and see” policy (wait and see what happens) they will be able to sell their products at a higher price in the coming months. Today “stocking” is a hedging strategy against the dual advance of the dollar and inflation.
How does the Ahora 12 program work and why is today convenient?
The Ahora 12 program is the plan promoted by the national government, through the secretary of domestic trade, to promote the purchase of nationally manufactured consumer goods in quotas. The businesses that adhere to the program do so through the financial entities that finance the purchase of goods, assuming most of the financial cost (a smaller part is absorbed by the business). The wide range of products includes clothing, technology, household appliances, furniture, tourism and many other goods. After the decision to drop 9 percentage points in the TNA of the program, it means that today buying with Now 12 you pay a CFT that is equivalent to 1/3 of what you would pay “outside the program”. This implies that today it is widely convenient to finance yourself with Ahora 12, since it brings the TNA to the equivalent of almost 50% of the projected inflation.
How does the exchange rate policy impact these types of financial decisions?
In the short term, the government’s strategy is to take care of and accumulate as many dollars as possible, efficiently managing the available resources. The exchange agreements with China (Yuan for Dollars), as well as the renegotiation of debt payment with the IMF in exchange for new disbursements and achievement of goals are strategic. In times of uncertainty it is where the central bank of a country comes out to demonstrate that it retains “fire power” to intervene in the market. Interventionism is necessary to ensure exchange rate stability and avoid “shocks” that are later transferred to prices. Sovereign bonds held by ANSES today guarantee liquidity of at least $11 billion, plus central bank holdings of approximately $15 billion more. This guarantees that there will not be any exchange shock until the presidential elections.
How does the dollar vs. inflation in the purchase of consumer goods?
The acceleration of the CPI in recent months begins to mark a gap between the advance in the inflation rate compared to the advance in the exchange rate. Monetary policy tends to sustain real monthly returns for those who bet on the peso, setting an upward path for the interest rate as a measure to combat inflation. The dollar is a macroeconomic variable where the market can be intervened by regulating supply and demand when equilibrium conditions so require. This means that if one variable advances 2 steps (inflation) the other variable advances 1 step (dollar), to contain inflationary expectations using the exchange rate as an anchoring tool. So those who position themselves in consumer goods that are dollarized or that are adjusted for inflation, will gain if they apply a smart purchasing strategy taking advantage of the Ahora 12 program.
Conclusions?
Although most small and medium savers see the dollar as a refuge of value, or simply bet on the “carry trade” making a 30-day fixed term, there are other types of investments that are related to the “real economy”. The SMEs that produce consumer goods, technology, the Argentine countryside, refrigerators and companies related to the fields of electricity or oil, are clear examples of the real economy. Producing goods and services through this type of company is very important to supply the demand for available money, stabilize inflation and generate genuine GDP growth, create more jobs and earn foreign currency into the country via exports. For this reason, it is very important to favor SMEs in accessing financing with programs that finance Argentine production at convenient rates so that these companies can take on debt that is payable over time with production.
Consultant in Economics and Finance.
Source: Ambito
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