Although the Presidency rules out any type of economic announcement in the speech that Javier Milei will give this Friday to
inaugurate the ordinary sessions in the National Congress
, all the eyes of the market are focused on the
keys that the president can give
regarding the
direction of the economy
for the next few months.
In the expectation, a rumor crept in about
a dollarization announcement
that Milei himself was in charge of banishing.
Instead, he acknowledged that the country may move
toward a "currency competition" scenario.
True to his
style, the president cited a thread
from
social
network
from other countries coexist freely with the peso in the daily economy.
SUCCESSFUL THREAD https://t.co/QvxZ9AjiH6
— Javier Milei (@JMilei) February 27, 2024
In a scheme of free currency competition
, the national currency does not lose its legal tender and continues to be used for things such as the payment of taxes, salaries, transfers and intrastate payments.
However, other currencies appear, such as the dollar, which coexist so that citizens can choose which one to pay, save or invest with.
In the City they agree that
the persistent fall of the financial dollar
, with the gap that this Thursday is just above 27%, and the constant repurchase of reserves from the Central Bank, which only one day in the last 54 rounds ended with a balance negative for its interventions in the market and
has already accumulated US$ 8,634 million since the change of Government
, are a
"necessary but not sufficient"
condition to start talking about a change in the monetary scheme.
A market analyst explained to this newspaper: "For there to be free currency competition there
should be no stocks
. And for that
they should release all the restrictions
that continue to exist and which are the same ones left by Massa. I think
we are far
from everything .
that".
In the latest statements from the economic team, it was insisted that the stocks could be lifted towards the middle of the year.
The market agrees:
before releasing all current restrictions on the exchange front, it is necessary to clean up the Central Bank's balance sheet and
further increase the level of reserves, which despite this year's purchases remain on the ground. negative, and support the demand for pesos, to avoid a massive flight towards the dollar.
"The clean-up of the Central Bank's Balance Sheet is a necessary condition
to be able to advance in the elimination of exchange controls that are still present. The question is
how much it needs to be improved
and what scheme is chosen to eliminate exchange controls," they explained. in the MegaQM fund manager.
"If an extreme situation arises, such as dollarization, it is necessary
to cover monetary liabilities in pesos with reserves in dollars
. This degree of coverage is still far away, since
currently it is possible to cover 55%
of these liabilities even considering the gross reserves, which include liabilities that may be payable in the short term (swap, reserve requirements, etc.)", they added and pointed out: "The conditions for an exchange rate unification can be achieved, but dollarization poses a level of consolidation of the
much deeper
balance ."
Despite these reservations, the financial system is preparing for any change of direction.
"Basically,
currency competition already exists today
and the use of the dollar was expanding in different markets such as houses or cars and others. Formal competition would be being able to freely decide in what currency not some, but
all transactions are
made and to "That is why
the Civil Code must be changed.
For the financial system, the dynamics will depend on what that transition is like, since in a currency competition the exchange rate could be higher
if there is a clear preference for hard currency
," they explained in a statement. frontline entity.
In another private bank they agreed: "If we moved to a scenario of currency competition, it would not be so disruptive for the system."
In a third entity consulted by
Clarín
they stated: "There are banks that are more prepared for this than others. We believe that the release of the stocks and the exchange unification could occur in stages. Today we have a great diversity and number of controls,
some of them which can be removed more quickly but others cannot
."
NE