Until yesterday the strategy was a devaluation of 1% per month for the wholesale dollar, and an aggressive sale in the future market, the Central Bank does not want to leave doubts that the wholesaler looks and does not touch.
The result of this strategy is a 100% gap that is unsustainable over time, since it moves away incentives to export, and brings incentives to import, a market that is also intervened.
What remains ahead would be to raise the wholesale dollar in an orderly fashion, or to generate a monetary policy to make the stock dollar fall in price.
What should we expect with the dollar?
The Government should give a clear signal regarding the wholesale dollarWe cannot continue to increase it at a lower rate than inflation, this generates an exchange rate delay, deteriorates the prices in dollars of our products abroad and hinders exports. We absolutely need a price recovery to begin. It is false that the wholesale dollar This is at a reasonable price, the tax pressure in Argentina today is much higher than in previous years, and this significantly impairs our competitiveness.
Monetary policy is a key tool to generate discouragement in the purchase of dollar bag, today we have a fixed-term deposit rate of 37% per year for small amounts and 34% per year for large amounts. These rates are below the inflation rate, and do not generate any incentive to save. The Government should raise these rates to levels above 52.1% annual inflation so that savers stop looking at the dollar, and start investing in pesos. Another tool could be to dry up the peso market, that would lead to a monetary contraction that the government wants to avoid.
In any case, what we are trying to show is that there is no adjustment without pain. However, If the Government wishes to free the stock market dollar, not adjust the wholesale exchange rate and not raise the interest rate, the only thing it will achieve is that the stock market dollar continues its upward race.
Another strategy that the government would have in mind would be to increase reserves to strengthen the peso. For this, he released a batch of corn so that it can be exported and earn an income of dollars (approximately u $ s200 million). In addition, in December comes the export of wheat and it is likely that they will enter u $ s1,000 million in that month. These are not important sums, but for them to take effect it would be necessary to restrict imports, which are what boost growth. Again it is impossible to make an adjustment without pain.
One possible way to make alternative dollars fall in price is an agreement with the IMF. According to the agency’s manual of good conduct, Every time you sign an agreement, you need to raise the interest rate, limit the monetary issue, reduce the fiscal deficit and free the price of the fees. A combo that would be unacceptable for the government, which is committed to the happy adjustment.
Why is the price of meat going up
On the way to normalization in monetary and exchange matters, the Government has a severe problem with inflation, since if the inflation data remains high, validate rates above 50% per year, normalization becomes disorder and the incentives of the population are run to the purchase of dollars.
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Pexels.
The price of meat is one of the biggest problems the government has these days. The intervention policy in the export market discouraged the fattening of the animal and the placing on the market of finished merchandise between 300 and 390 kilos. The producers, given the lack of profitability of the sector, started to buy calves and populated the meadows: there they gain weight at a rate of 500 grams per day, to carry a calf of 200 kilos to 390 kilos, it takes you 380 days, just over a year.
When a calf enters a feedlot where it eats a ration (predominantly corn, which is at a very expensive price), it goes to market in approximately four months. This change in the way an animal is finished causes the flow of merchandise that reaches the market to change, this decreases the supply momentarily, and if the demand is constant, the price of meat rises.
The Government does not want the meat to rise, it creates conditions for the supply to decrease, it puts little money in the citizens’ pockets, but then it does not want to pay the consequences of the price increase. It intervenes in the markets, and presses so that what will invariably happen does not happen.
conclusion
- Half-way renovations were never good, they only accelerate the necessary adjustment processes that are being delayed. The non-intervention in the market of alternative dollars would generate a saving of reserves for the government, but if it does not work on the income of dollars, the price of alternative dollars will seek a new equilibrium point, on the rise.
- The Central Bank will issue a lot of money until the end of the year, has to finance the treasury deficit that spirals in December because all the items are adjusted. An expansion of pesos will invariably drive dollar prices up.
- If the fixed-term interest rate remains negative versus inflation, there are no incentives to save in pesos. If to this we add that the credits are at a negative rate compared to inflation, and are functional to pay less income tax, this creates an incentive to take financing and buy more merchandise. All roads lead to a more expensive dollar and inflation levels above 50% per year are consolidated.
- The agreement with the IMF was far before the elections, and it is still far away today. There is no vocation to pay, nor to present a realistic plan. Thus, all roads lead to the dollar.
- We have a jail government, many variables with stocks, regulated, cared for, intervened and repressedThus, there is no economic plan that works, every day a variable escapes from the prison, which is the State, and we have economic fluctuations that affect private activity. Prices must be left free, long live freedom.
Source From: Ambito
