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Three big questions of the Argentine economy


In other words, it would be logical that above the previous exchange rate band unless the band BCRA below. This is the only difference between the current exchange rate regime and a dirty float. That dirty float could easily become almost pure float, when the demand for dollars in the next few months have demonstrated how formidable.

Why? As the IMF has banned its rules would allow them to use their bins dollars to fund capital outflows from the Member States. Thus, we have to weigh recent trascurran measured as days and weeks.

Now, although at the moment you can not make an assessment of the work of this new "Dirty float" and he can be estimated dollar – and with great concern – the state of the situation of country risk. It happens that the government decides to prioritize the use of reserves to calm the dollar at the expense of private creditors in the country. Since the stock of reserves is one, everything is designed for the purpose, which can not be the money can be allocated for other purposes. In other words, it is applicable to the current situation, the old adage known "Syndrome Short blankets".

If he dispenses with the financial and electoral shortsightedness and forget a few dollars a day and the election that the government – and all – need to meditate in order to avoid harm in the short term, we are raising about the risks that may arise in the medium. If the BCRA sold dollars on the market. What will happen to the payment of public debt as the months go? Do not forget that even with dollars devoted to repay the debt to the IMF, it was estimated that at some point, begin to pass 2020 foreign exchange reserves of the Central Bank to meet the obligations.

So, far, far away, this situation tends to stability, even if only precariously, in the medium term. To this end, the central bank must buy dollars, which in the future can be used to pay the debt. This has not been achieved even at speeds as in prehistoric times were at a moderate level, neither stupid levels of 6% on a monthly basis as those who are now paying BCRA. With an annual effective rate of more than 100%, as it is not reached between the one dollar or even more speculative capital, which lies around the world, it is a clear sign that the RMS & # 39; serious problems with payment ahead of the national debt is not in a remote future.

With this panorama, we should think about whether it makes sense to look at whether there is or there is no point or point-less monthly inflation, or if you have a 3% or so of devaluation: if Argentina suited to the process of the termination payment now all save on the price rise and the dollar will repay later. The government is not in trouble Argentina to stabilize the economy. He stuck to a simple problem of president almost personal survival.

The big dilemma that, as the months, concerns about the stability of the peso and concerns about the risk of default on the public debt will be converted into a single unified problem. If this happens, the dollar IMF is almost finished, and every dollar spent on the removal of the weight of the market will be mourned and missed.

From this point of view, this government seems not sealed success: winning the fight even exchange tug of war and the elections have to deal within a year – no more – with the possible default caused by its own policy or from a place in the opposition, in 2020, she It will be strongly rejected by public opinion, if you remember how to generate the duty, and then to top it misspent dollars IMF false futile attempts to control the dollar price. There seems to be no way out for Mauricio Macri and his people, even though they did not notice in the daily struggle, in which they are exposed.

This government, or suffer electoral defeat almost immediately, or a huge failure in the course of the year, even when the authorities. At this point, it is possible that more than one reader may be wondering: What is the field of dollars? Can not they may be the savior? The problem that we have much more than $ field. As the rescuer to & # 39 is no more than a myth: there are many, and the field. Although the total yield up to U $ S 30,000 million, the producers decided to save money is a personal issue for them. And they usually do it in dollars or grain stored in silo bags. Finally, believe in this false life should be noted that when the historical series of the dollar there is no clear positive seasonality in relation to the mass is not observed in the months of April, May and June, the yield on the sale of concentrates. Argentina should have a very juicy dollars revenue to stabilize the suras & # 39; ozna. Significantly higher than the annual harvest.

Thus, "Escape" Location easy to find the remark: Argentina should be as soon as possible to a large extent of the exporting country, which require real high dollar, Trade balance surplus than today & # 39 is necessary and, above all, it is necessary that can not be achieved a sharp decline in imports, as now happens, but strong growth in industrial exports and services. Along this road, arm wrestling with the dollar as the market rise will be a clear route back.

At some point, with or without supertasas, with or without an election victory for the government, it will produce a clash with the harsh reality. By the time you can not choose. We need to let the dollar up, which you have to climb. There are three big question is: how many dollars will be wasted in order to control the dollar a bit of time, that the level of debt to pay there, and if it happens … "Reality Check".


Walter Graziano Asociados in

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