The President Javier Milei ratified in the last hours that He does not want to unify the dollar, lift the stocks and, therefore, devalue. He said that Only in 2026 will do it, or that in the jargon is called “Run the arch.”
The novelty is that, now, the responsibility that this happens to International Monetary Fund. If you look at the IMF, The agency comes from lending to Egypt about US $ 8,000 million. For that to take place, the Arab country applied the devaluation “Big Bang”the same that promote large investment funds.
How is a “Big Bang” depreciation? It is a type of devaluation in which a country decides to do A sudden and magnitude adjustment in the value of its currencyusually suddenly and without notice. Instead of making gradual or controlled adjustments, devaluation occurs immediately and significantly, which generates a drastic change in the exchange rate.
The term “big bang” refers to the fact that it is a abrupt change, as a “great outbreak”, in which the currency is allowed to depreciate quickly in front of other currencies. In general, this may be an attempt to correct economic imbalances, such as a fiscal deficit or an international reserves crisis, but it can also bring negative effects such as high inflation and loss of purchasing power.
“Kick the arch” and a message for those who make “Carry Trade”
In the government they do not want to know anything with this recipe. Elliptically, both Minister Luis Caputo and the President himself, were responsible for systematically denying in the last hours that an exit of exchange and exchange unification with an implicit devaluation could take place. They point out that Milei anticipated many of the IMF’s suggestions such as structural reforms and tax adjustments that aimed to correct economic imbalances, including high inflation and fiscal deficit. But at the same time they argue that including the devaluation of the currency as a way to align the real exchange rate with the officer, and reduce economic distortions, is not in the plans.
Strictly speaking, President Javier Milei’s play this week was in the opposite direction, “kicking” the date for later in time. Milei spoke to the investment funds that maintain their positions in pesos to the “Clear” the doubts for the “carry trade” of the coming months pointing them, in encrypted way, that There will be no changes in monetary policy or stock exit for 2025. Not only did the “Crawling PEG” monthly drop to give them “more dollar rate”, but, in parallel, he said that the elimination of exchange restrictions It would have only place in 2026, contradicting what he had pointed out just over a week ago. “Without the help of the Fund, on January 1, 2026, the stocks will cease to exist,” he said on Monday.
“Trumpism” although it hurts: all against the IMF
The loud winds that arrive from the north intuit the Rosada. President Donald Trump’s decision to impose tariffs on Canada and Mexico and add more tariffs on China is only the Beginning of a draconian change in global economic and commercial policy. The government then hugs a exchange scheme that is rejected by the IMF. However, with a Trump withdrawing the United States from international organizations, the pressure on the IMF bureaucracy is the order of the day. With that they also speculate in the Casa Rosada.
On the other hand, a devaluation such as the one proposed by the IMF, although it would generate a reduction in pressures on the International reserves and an improvement in the Competitiveness of exports, also It would cause inflation quickly, increase the cost of external debt and, even more, worsen the economic conditions of the population.
Source: Ambito
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