07/14/2020 - 18:48
- Clarín.com
- Economy
- Economy
The government is preparing for the granting of the third round of the Emergency Family Income (IFE), which it says will be the last and will involve issuing another $ 90,000 million as it will reach 9 million people.
In the Central Bank they assure that they are not worried about the possible consequences of this additional injection of funds in inflationary terms nor, neither, on consumption.
With the dollar controlled and the wholesaler rising 2.3% in a month (above the expected inflation), those close to Miguel Angel Pesce consider that there are conditions for the pesos not to rush out to look for a "blue" dollar that in $ 127 they consider out of focus in the event that the government is moderately successful in the debt swap with external creditors.
But even with the dollar stabilized and with the "compensation effect" that the IFE bond implies in the pockets of families who could not go out to work due to quarantine, controversy continues as to whether economic activity needs the launch of the $ 5,000 bill. that the Central Bank has been studying for months.
Jorge Brito , president of Banco Macro, publicly claimed that ticket based on the fact that "people doubled the amount of cash they had." The quarantine would have increased the families' demand for pesos as a precaution, given the uncertainty generated by the end of the pandemic and what the future of many Argentineans will be like.
The lack of one or two banknotes with a higher denomination than the current $ 1,000 generated additional tension between the Central Bank and the banks due to the handling of cash, both due to the cost of storage and transportation (for example, to fill the ATMs) and the sourcing the pieces of physical money.
Some banks say in a low voice that when they claim banknotes, the Central Bank releases pieces of $ 100 and reserves for itself those of $ 1,000, which are the most wanted by companies and individuals.
From the BCRA they reject the accusation although they admit that to supply fluidly the greater demand of July 8 (it was a peak), and of the long weekend that followed, they had to resort to "185,000 million $ 100 bills" with the that banks had to fill in ATMs during those days of high demand for cash.
Despite the strong growth of electronic payments during the quarantine, Argentine consumers remain firm when paying in cash and especially in local stores where the issuance of invoices often leaves formality aside.
On the other side, that of the Central Bank, there are at least three strong arguments in favor of postponing the release of the $ 5,000 bills in the short term.
The strongest in operational terms is because they have planned and are running the printing of $ 1,000 bills to face up to the peak of demand in December. Thus, everything indicates that the $ 5,000 bills that are in gestation will only see the street in 2021 .
Another argument is the total recovery of the workers of the Casa de la Moneda who suffered from the coronavirus infection, which they consider the printing landscape to be clear.
The third argument, and the most widespread so far, is that the government does not want to raise a higher inflationary expectation with the $ 5,000 bill just as activity begins to unfreeze at the country level and in the AMBA after the strictest quarantine.
The monthly inflation in quarantine, determined by a significant reduction in activity, largely explains why the indexes of the last few months are below 2%.
The common thread between a new series of the IFE bond and the idea of not generating additional inflationary expectations with the $ 5,000 bill lies in the fact that the Central Bank and the Treasury believe they have begun a path to timidly grow savings in pesos, thus absorbing part of the excess liquidity generated by the issue, and avoiding pressure on the dollar.
They highlight that, although in an incipient way, the jump in the placement of pesos in Corporate Negotiable Obligations (they were 14 in May with a jump in the volume operated of 500%) opened a path for the transformation of pesos into financing.
The ONs are a way of financing companies by issuing securities validated by the Securities Commission and that allow them to take pesos or dollars directly from investors and, in general, they find it more accessible than bank credit.
Most of the operations are carried out with a "dollar linked" clause (tied to the official exchange rate) or a wholesale rate (Badlar) plus some over a rate of 2% to 4%.
The common thread that closes the circle is that the Central Bank is convinced that it has managed to stabilize both the official dollar and the "cash with liquidation", although it knows that the exchange gap of 58% is large.
That belief may have some insanity this week if the authorities fail to close the extension of the term of the "swap" with the Bank of China, which represents the possibility of accessing yuan, to be exchanged for dollars, in the event of a currency run.
This "swap" has two parts: US $ 10 billion that Martín Redrado hired when he was Central president and US $ 8,500 million that Federico Sturzenegger negotiated, incorporating for its renewal the need for an IMF visa.
The talks are advanced, they say at the Central, but in negotiations with the representatives of the Chinese government, it is never certain to have the approval for the extension until everything is duly signed.
