After six consecutive days of silence in the face of the rise of the blue dollar, the Minister of Economy gave a concrete signal on how he will advance in the attempt to calm the exchange market.
When the dollar scratched $500, President
Alberto Fernández
came out to denounce that "we are witnessing a permanent practice of the Argentine right" and Minister
Sergio Massa
announced his strategy on Twitter.
First, the warning that
"all the tools of the State will be used to order this situation"
and then he announced that "the IMF was notified" of the restrictions that weighed on Argentina" (it is assumed that the effects of the drought) and "anticipated that will change in the rediscussion of the program".
In other words, the minister would announce to the IMF that he needs flexibility to be able to sell dollars and
dollarized bonds
in order to intervene in the market with more intensity and stop the run.
The request is part of the discussion about what should be the additional aid that the IMF should grant Argentina for the loss of foreign currency caused by the drought.
Of course, the drought is not the responsibility of the government, but the skyrocketing of free dollars has a lot to do with a response to the official policy of delaying the official dollar (it would be
25% behind
) in the search for some anchor to contain inflation. now also fired.
A detailed report on the rise in prices from Fundación Capital highlights the fact that, during the past month, 42% of the items that make up the cost of living index increased by
more than 7%
.
It is worth noting that the country fully entered into a new inflationary regime and that inflation, which in the first quarter accumulated a rise of 21.7%, is the
highest record in 30 years
.
And everything indicates that this time the inflation that was forecast at 7% could be accelerating in the heat of the exchange rate run of the last week.
The increase in the cost of living was 7.7% in March, the Central Bank accelerated the rate of rise of the dollar, taking it to an average of 6.5% per month (vs. 5.8% in March and 5.3% in February) laying the foundations for another month of high inflation.
The cost of living rises, the rate of devaluation rises against the official dollar (the agricultural dollar of $300 adds its own) and increases of 50% in electricity rates are anticipated for higher-income consumers starting in May and all lubricated with a
fluid level of monetary issue
.
Massa will ask
the IMF to advance US$5 billion
of disbursements scheduled for this year, citing the impact of the drought.
But he has the result of the fiscal deficit for the first quarter against him.
On this point, Fundación Capital specifies that the result of the primary deficit had as a goal $455,000 million and was $689,930 million and although "a reduction in spending in real terms of 5.5% was observed in the first quarter, in practice It would imply losing the last anchor of the program".
The minister faces
a trap
that he himself was paying.
With the soybean 1, 2, and agro 1 dollars, he gave the signal of being
willing to devalue
Sectorally in case of needing dollars and to increase the collection for export rights.
Both soybean and agricultural dollars mean that the government must issue more pesos per dollar and at a time of exchange rate uncertainty, these pesos accelerate the search for
refuge in the dollar or in consumption
, contributing to increasing pressure on price indices.
If the agricultural dollar of $300 (soybeans plus regional products) were to meet the official objective of liquidating US$5,000 million, the Central Bank would have to
issue an additional $440,000 million with consequences for inflation and the dollar.
Nobody knows if the liquidation of exports will finally reach that level, but if you bet that
the Central Bank will end up raising the interest rate
, which is a point of negotiation with the IMF.
There is a consensus among operators that the 81% annual rate (annualized 6.75% monthly) fell "short" in the face of inflation and the skyrocketing of free dollars.
The government, which captures most of the credit (private credit is at a low level) would be willing to raise the rate, but the IMF questions the level of issuance generated by each point of increase.
As the Leliqs and the passes already absorb more than $15.5 trillion, each increase in the rate implies a level of issuance that threatens stability.
Thus, the image of the short blanket to explain the impossibility of balancing the variables is very short and the short-term solution seems to rest on the increasingly
strict closure of imports
.
It will reach?
For now, the minister made the decision to increase the supply of dollarized bonds with the risks that this implies in the sense of selling cheap bonds to attend to an exchange situation in which buyers find only one seller: the Government.
Without sustainable rules, the end of this story is written in the air: a higher official dollar, higher inflation (it is aiming for 120% this year) and interest rates for devalued pesos, also higher.