The 8.4% of inflation in April continues to have consequences and the announcement of measures published by the Ministry of Economy on Sunday fails to stand or change the climate of uncertainty in the markets.
The rise of $ 14 in the blue dollar in the first two rounds of the week maintained the widening of the exchange gap that was constituted in the result to follow in the coming days.
An unwritten rule of government action is that it reacts when the distance between the wholesale dollar and the free or financial dollars exceeds 100%. With 80% gap the official spirits calm down, with 100% or more they are enervated and even more the prices.
The gap between the wholesaler of $ 231 and the dollar counted with liquidation is around 104% and with the blue (at $ 488) touches 111% and turns on the red lights of the official board in the middle of an inflationary shot that finds no ceiling.
The survey of the first week of May of EcoGo (Marina Dal Poggetto) projects for this month a rise in retail prices of 8.8% with the same percentage increase for the food and beverage basket.
The Capital Foundation (Carlos Pérez) maintains that May already has a high floor of around 8% "by having the full impact of the jump in financial dollars, while registering important adjustments in regulated prices, which will add 1.5 points to the cost of living index."
Electricity and gas tariffs increased by 3.2% and 25%, respectively, on average for residential users. To which is added the 7.8% increase in public transport in the AMBA.
On that basis, and according to Sunday's Economy Ministry announcements, the Central Bank faces a new exchange rate dilemma: if it accelerates the rate of increase of the official dollar so as not to lag behind inflation, and limit the loss of foreign currency to pay for imports, it would be fueling the rise in food prices.
But, if it delays the official dollar without having foreign currency in the reserves, the bets for a devaluation of the peso of some magnitude would increase.
In the Government they recognize that they lost the battle to make the official dollar credible at $ 231 when the cash with liquidation is around $ 480 and the blue $ 490 and without having time or political weight to try some plan that tends to close the fiscal deficit a little or to reduce a great wave of issuance of pesos that bathes the market.
So what remains for Sergio Massa, they say in his environment, is to redouble the intervention in the exchange market by selling dollarized bonds (and also spot dollars. Last week it was around US $ 130 million) to see if it loosens the pressure on the cash with liquidation but, for now, it is not noticeable.
The minister lets it be known that he expects the International Monetary Fund to authorize in the first week of June the disbursement of the equivalent of US $ 12,000 million and that this will be a balm for the dollar. It should always be considered that officials are hopeful when faced with difficult situations.
They say in Economy that, on this occasion, the IMF does not ask for a devaluation, but if, as already started, a rise in the interest rate in pesos so that it does not lose against inflation.
And, in addition, some fiscal signal that, they interpret in the Government, would be fulfilled with the increase in electricity, gas and transportation rates and the consequent reduction of subsidies. In pre-election times there is always room for imagining.
The key to the advance of IMF dollars will be to know if the government will be authorized to use them to intervene in the market to attenuate the rise of free dollars.
In recent days that intervention was growing and the gap left the door open to another "mash" of those who buy Mep dollar and sell in the blue.
On Tuesday that gap was 10.1% having no less than $ 45 difference per dollar. Some businesses that allow the exchange rate trap are difficult to overcome.
The government has already proven that, in this context, delaying the official dollar does not prevent a jump in inflation if there is a jump in free dollars.
And now the bet on interest rates is still a little more of the same: the reference rate rises six points to 97% per year (8.08% per month) to subtract incentives to cover savers buying dollars but, at the same time, it is tied to having to issue a trillion pesos per month to pay the interest on the liquidity bills (Leliqs).
Thus, the Central Bank tries to deposit the surplus pesos in the banks and sells to the Leliqs banks for which it undertakes to issue to pay the interest and thus increases the amount of pesos that can be dumped into the market in the future.
Many pesos in circulation and the net reserves of the Central Bank in the negative field revive the need for Sergio Massa, whether or not he becomes the candidate of the Frente de Todos, to obtain foreign currency to calm to some extent the transit to the next government.
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