9600 million IMF to curb the dollar | Dujovn …

The International Monetary Fund has authorized the government to put in place a limited daily dollar selling mechanism to try to limit the impact of persistent capital outflows on the exchange rate. The additional maneuvering capacity allowed by the multilateral agency allows the Treasury to sell $ 9600 million until the end of the year through daily auctions of $ 60 million. Sales starting in April are designed to reduce exchange rate volatility and soften the money supply, which, despite successive increases in interest rates, has proved insufficient to ease the growing demand for dollars. The measure was presented in Washington by Treasury Chief Nicolás Dujovne. The manager, who before meeting the announcement, met with IMF Managing Director, Christine Lagarde, stressed that it was a tax measure. The operation is combined with the austerity program because it involves financing costs in pesos via the use of dollar debts.

The details of the measure were not officially communicated but were announced in two interviews published by Clarin, La Nación and Infobae. "We are going to sell dollars at the current exchange rate in daily bidding.When there is a foreign exchange transaction, there is an influence on the foreign exchange market but the goal of the "Operation is not to change the exchange rate.The goal is to convert the dollars into pesos," Dujovne said. "We guarantee the macroeconomic stability of Argentina," said the head of the US capital. Economists consulted by PáginaI12 report that the system does not offer the necessary discretion to stop a possible new exchange rate (see separately).

The use of the Treasury's accumulated dollars as a result of IMF disbursements and, to a lesser extent, US dollar investments were already part of the government's announced financial strategy. Dujovne had already used the same mechanism in 2018 when it had provided the market with the Fund's loan dollars. For this year, it remained to know the extent and mechanism of these operations. In other words, the IMF's approval was missing. The resumption of financial turmoil has accelerated the times.

The negotiation took place during the mission of the body that had overseen compliance with the program last month. The visit to Lagarde offered a new political impetus. Subtract the official approval of the IMF's board of directors which should allow the fourth disbursement of the loan for an amount close to 10 800 million dollars. From the Treasury Palace, they indicated that the case of Argentina would be badyzed during the last week of March. The report prepared by the staff, which will serve as a contribution to this meeting, includes the Treasury's auction system.

The adjustment and reform program initiated by Argentina to access the IMF loan limited the degrees of freedom to implement economic policies. Any change resulting in a waiver of the terms of the agreement requires authorization from the multilateral organization. The limited and limited mechanism for increasing the supply of dollars authorized by the Fund does not alter the free floating exchange system between the bands adopted by the Central Bank. The supposed rule allows the exchange rate to increase by 30% per day without allowing the intervention of the authority. Between the floor and the ceiling, updated daily, there is almost 11 pesos difference (today between 38.98 and 50.45 pesos). "What the BCRA will announce at some point, is how fast it adjusts the movement of the bands," Dujovne said before the central president, Guido Sandleris, announces a series of changes in the gang system.

As at the meeting with Lagarde, the manager reaffirmed his optimism about the activity. "We think the floor in terms of activity we saw between the end of November and the beginning of December. From there, a gradual recovery began, very slowly," said the head of the Treasury .