It is already a conditioned reflex: when the blue dollar escapes, everyone looks at the Central Bank waiting for the rate of devaluation of the official exchange rate to accelerate. And, generally, that was the sequence: in order to stop the gap, the official dollar moved to give a reassuring signal to the market.
However, something contrary to tradition is happening these days: just as the blue speeds up, the government’s economic team gives the exact opposite signal and is slowing down the rate of devaluation.
With only two business days before the end of the year, the rise of the official dollar accumulates 5.2% in December, which implies a significant drop from the 6.6% registered in November. And not only that: the brake on the dollar will be a change in trend, given that since Sergio Massa took over at the Ministry of Economy the norm had been that each month produced a higher devaluation than the previous month.
The objective was to prevent further exchange rate arrears from accumulating -something that, on the other hand, was a broken promise with the International Monetary Fund– and that, in this way, the economy would gain competitiveness.
It was so that the “crawling peg” had an upward path: 5.7% in August, 6.2% in September, 6.3% in October -the first month of the year in which the dollar exceeded inflation- and then 6.6% in November with inflation surprisingly below the 5%.
This led to the fact that in December, with inflation falling one notch, the Government saw a brake on its devaluation rate as a natural way out, so that the variables -also including the interest rate- begin to align with inflation that goes down gradually.
While the blue rises, the Central Bank explained in a statement that it is accumulating reserves
Key data for the dollar: reserves rise
The brake on the “crawling peg” was taken for granted in the political sphere: it was a cause of tension within the government coalition itselfsince it was considered that an accelerated devaluation worsened the wage situation and could even be, in itself, an inflationary factor. So it was that, at first covertly and then explicitly, economists close to Kirchnerism began to demand a return to the classic situation of a dollar acting as an “anchor” for the rest of the prices.
With inflation that, according to Massa, will drop one point every two months until it is below 4% in April, it was an expected response that the “crawling peg” would also drop with a graduation in line.
However, Massa and the Central Bank were met with a dilemma that had not been foreseen in the plan: that a accelerated rise of the blue put a note of pressure so that the devaluation of the official exchange rate continues at its cruising speed of more than 6% per month.
In December, the parallel market dollar broke a months-long lull and accelerated 13%, something not seen since last July’s currency crisis. How serious is the situation? Although the 102% registered today, the gap between the blue and the official is far from the peak of 160% that had been reached in July, it is a high figure compared to the average of 70% that was registered in the first semester. of the year.
It is within this framework that the dilemma of the moment arises: continue devaluing to prevent the gap with the parallel from skyrocketing, or slow down the official dollar to keep it in tune with inflation who is showing signs of moderation?
And the signals have been clear: the second option will be chosen. Although the blue was not mentioned explicitly, the statement from the Central Bank last Tuesday gave an argument in this regard: this is a time of reserve accumulation.
After the moderation in the CPI for November, the Central Bank slowed down the rate of devaluation
Dollar: temporary calm and turbulent summer?
Only on the days of Tuesday and Wednesday, $386 million entered the BCRA coffers, thanks to the income of dollars from soybean exports. The preferential dollar regime for soybeans is approaching its export goal of US$3 billion for the month, bringing reserves to the border of US$43.7 billion.
This implies that the net reserves -that is, those that remain available to meet obligations, once bank reserve requirements and credits are subtracted- exceeds US$5,000 million, thus meeting the goal committed to the IMF.
The implicit message that the Central Bank sent to the market was that the diagnosis of the exchange situation must not be mistaken: unlike what happened on other occasions, when the rise of the parallel dollar occurred simultaneously with a critical situation of the reserves, today things are different.
In other words, an anomalous situation is taking place in which the parallel market has a reaction that does not appear to be motivated by a deterioration in the macro situation.
Of course, it is an issue where there is far from consensus: they are Many economists believe that the BCRA cash could deteriorate quickly and that there are reasons to think that the blue could continue to rise.
The biggest concerns are focused on the demanding summer financial schedule: in January it will be necessary to pay US$2,751 million to the IMF, while in February the account will be US$561 million and in March US$3,033 million. In contrast to this outflow of foreign currency, this summer is expected to be one of the weakest in the contribution of dollars from the fields, given the effect of the drought that halved the forecast for the wheat campaign.
Some market experts, such as Salvador Di Stefano, maintain their view that blue could be at a level of $400 in the short term. and a report from the Ecolatina consultant He recalled that, in real terms, blue maintains a certain level of lag. “At today’s prices, the blue of last July’s peaks would be $460, while, in the same comparison, the blue of January was $380”warns Ecolatina.
The drought of the countryside will lead to a shortage of dollars during the summer: analysts warn of currency tension
why did the blue dollar rise
The truth is that many market analysts advise against the Central Bank stepping on the devaluation brake and they advise that, between following inflation or the blue, opt for the latter. The argument is that if inflation is moderating, then it is the ideal moment to recover the competitiveness of the economy, just at the moment when it is most necessary to prop up exports.
The prospect of a “drought” in foreign exchange until next April -when the soybean harvest season begins- leads economists to recommend not being overly optimistic and, consequently, maintaining the rate of devaluation.
But in the Government the vision is different. They believe that, this time, there is completely divorced motives between the blue dollar and the macroeconomic situation. Contrary to the perception that exists in the market, officials argue that the rise in the blue could only be temporary and that those who are buying now could be disappointed in January.
The official explanation for the sudden rise in the blue is that there was a increase in demand in the informal market, as a consequence of investors who disarmed their positions in the United Statesfearful that due to the new information exchange agreement, they may be left exposed before the AFIP.
On the other hand, the officials point out that there was a offer retraction, as a consequence of the new regulation that favors tourists, who are now recognized at the stock market exchange rate. Consequently, now visitors use credit card and not so much cash bought from the “little trees”.
In other words, the reasons why the blue is rising are, ultimately, reflections of positive situations, such as the greater formalization of incoming tourism and the more effective fight against capital flight to tax havens.
The next few weeks will tell which of the two visions is the correct one. While the scenarios that officials argue may be true, there are also more underlying reasons for pushing the dollar higher. Mainly, monetary expansion which continues even though there is no emission from the traditional point of view: It happens that every month $440,000 million are poured into the market for interest payments from the Leliq that the Central Bank uses to withdraw excess liquidity.
And that liquidity is one of the classic problems of every summer, since for seasonal reasons at that time of year demand for pesos falls by the public.
In any case, the message that the Government is transmitting is clear: no matter how much the blue continues to rise, does not intend to speed up the “crawling peg” rather it will keep it in line with the inflation rate.