The jump of the blue dollar in the last month was so vertiginous that it overshadowed the also important advance of the interest rate of fixed-term deposits, which is the same reference of the Central Bank for monetary policy.
Between April 10 and 25, the rise of the blue dollar was 29.5% and swept away the expectation both in exchange terms and price remarking.
At the door of the release of the April cost-of-living index (forecasts calculate an increase of more than 7%) and when financial dollars seem to have taken a breather, the power of the interest rate in pesos will have to prove its effectiveness.
On April 25 and with some delay in the context of exchange rate instability (that day the blue had touched $ 495) the Central Bank raised the reference rate from 81% to 91% annually to increase the remuneration to fixed-term deposits up to $ 30 million and Liquidity Letters (Leliqs).
In this way, banks start to offer 91% per year (7.6% monthly or 141% annual cash) to fixed-term depositors and the Central Bank pays banks 91% in exchange for Leliqs in an attempt to close a circle that seems unbreakable.
The financial system captures pesos and passes them to the Central Bank and a wheel is set in motion that ends up financing the Treasury, which absorbs part of the pesos by putting bills and bonds as collateral in the assets of the Central Bank.
This circle has as its official argument that the Leliqs and the liabilities of the Central Bank (monetary base and pass operations) are part of the monetary policy instruments that justify them.
The nominality of the amounts in pesos is frightening, so some experts fear what they call the "snowball effect" of monetary policy.
In approximate numbers the monetary base (bills in circulation and the reserve requirements of the banks in the BCRA) is around $ 5 trillion. Thus, with the Leliqs (about $ 10 billion) and the passes (around $ 3 billion), the liabilities of the Central reach $ 18 billion.
A sensitive point is that on the $ 13 billion of Leliqs and passes the Government must now pay the increased interest that adds up to around one billion pesos per month.
For the government, and for many economists, that "snowball" doesn't pose a big problem. Partly because not having constituted it would have implied a greater jump in the dollar and inflation, but also because they consider that these pesos should have their counterpart in the assets of the Central Bank in dollar terms. And therein lies one of the problems.
For a long time the Argentine economy has been characterized by having many pesos and few dollars and this year the drought worsened the picture by having about US $ 20,000 million less than agricultural exports, so only a devaluation would make effective a rise in the assets in dollars of the Central.
In the Government, both Vice President Cristina Kirchner and Economy Minister Sergio Massa have been resisting a devaluation and so at the beginning of May the Central Bank faces the data of having negative net reserves.
It is at that point that the power of containment of the interest rate in pesos begins to charge a relevant value. And it's still unknown whether that increased firepower will be working.
It will be possible to verify if, indeed, fixed-term deposits in banks rise and if the rate, in addition to being positive against inflation, is also positive with respect to the increase of the blue dollar and the financial ones (MEP and cash with settlement)
The dilemma is important because the blue dollar was rising to periodic jumps and in one year increased 131% and the rate ran behind with the additional that saving in dollars is a well-known feature of the Argentine bimonetary economy.
In other words, and when the average of the forecasts compiled by the BCRA place inflation at 126.4% this year, it is very likely that the interest rate will continue to run behind the savers' search for coverage.
Also, that's just one side of the currency reality of the hedging process.
To the question of how companies are seeking to protect their assets, experts try two answers: if they can, getting dollars at the official price ($ 227 the wholesaler) to advance imports. If not, buying bonds tied to the official dollar (dollar-linked securities) to hedge against a possible devaluation.
The search for cheap dollars or substitutes for the official dollar has been going on for some time and it is worth remembering that on June 21, 2022, in the days before the resignation of former minister Martín Guzmán, the vice president was already talking about the "festival of imports".
From that moment until now the wholesale dollar rose 84% against an inflation that took clear advantage and despite having tested the soybean dollar 1 and 2 and agriculture 1 ($ 300) and that, despite the drought, the Government maintained its policy of delaying the exchange rate.
The crossroads now arises in that not having devalued does not exempt the population from having to suffer accelerated inflation with falling purchasing power of wages and pensions and impoverishment.
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