But the key data is the gaps: against the official dollar, the blue closed on Friday -up- with a spread of 88% while with the MEP dollar the gap is 75% and the CCL at 78%. To avoid a sudden devaluation jump that would fully impact the economy, the strategy aims to reduce the gap where the different versions of the dollar in the stock market continue to fall while the official keeps the increases moderately below inflation. . But how long can it hold up? on Ambit We consulted different analysts on the subject.
“This week ends with a gap of around 77%, the lowest level since October 2021. Parallel prices moved lower due to the optimism generated from the expectation of approval of the agreement with the Fund (which implies the progressive cessation of the monetary issue, the main factor that had been fueling the gap). The agreement has a target of reserve accumulation, which would be achieved via a current account surplus, which makes the exchange rate (if dollars are missing, you have to raise the exchange rate, and vice versa). The more the official exchange rate is updated, the lower the expectations regarding a dollar in arrears, which takes pressure off the exchange gap,” he said. Paula Malinauskas, Economist at the consulting firm LCG.
“The gap with the alternative dollars can be reduced even more, but we expect it to remain high. The agreement with the IMF was good news that allayed fears of a soaring dollar, and in this sense the expectation of higher incomes also played in favor of currencies due to the rise in commodities and fresh funds from the IMF.Financial dollars had risen due to fears that the agreement would fall apart and this news brought some relief.In this context Another factor comes into play, which is the carry trade. The rise in interest rates (which will probably continue) favors the transfer to pesos in the short term. The question is how long that will last, because eventually some of the savers will want to switch to dollars again and that would push the price of the dollar,” he said. Isaiah Marini, economist at Econviews in dialogue with Ámbito.
“In this scenario, the gap is likely to drop a bit more, maybe to 70%, but it’s unlikely to drop any further than that. This is because the agreement does not imply any type of measure that effectively aims to reduce the gap, and in fact the IMF endorsed that the government has greater powers to control capital. In addition, the real exchange rate will remain ironed and this level of reserves is not enough, so the Central will not hesitate to tighten the trap when it deems it convenient. And when that happens, the gap goes up,” the economist estimated.
For its part, Pablo Repetto Director of GRA Consulting warned about the possibility of a sharp rise in the “cash with liquidation”: “There is a risk that is associated with the amount of pesos that is circulating in the market. We follow the relationship of M3 in average pesos measured in CCL. This value Given the issuance that there has been and the drop in the CCL in recent weeks, it has taken M3 measured in CCL to the maximum of the entire government of Alberto Fernández On previous occasions, when these maximums have been reached, they have had a adjustment of that value through a significant rise in the CCL. This could happen again or it could not happen. For it not to happen, there has to be a change in expectations.”
In this sense, the economist described as “light” the agreement with the Fund and marked the difficulties that the international context poses for the fulfillment of the goals. Those difficulties are related to the rise in the international price of gas – which the Argentine government will have to pay three times more than estimated at the beginning of 2022 – generating inconveniences in the exchange and fiscal balance. In that sense, Repetto assured: “That is not to say that the gap cannot be held at these levels for a while or come down a bit. But there is a risk that there will be a positive overreaction and at some point it rebounds and when it does react, it generally reacts strongly.”
The Central Bank Strategy
In another sense, Pablo Repetto added that the agency’s strategy regarding the official exchange rate may be sustained for a while, but not for long: “If it weren’t for the appreciation of emerging currencies, it would be a problem. Because the rate is well below of inflation. Although international inflation is high and helps, local inflation is higher than expected. Today, the Central Bank is being favored by emerging currencies such as the real”. And he concluded: “As long as this issue stays that way, the BCRA may have to speed up the rate of devaluation but it would keep it under control.”