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Freezing electricity, gas and transmission tariffs for prolonged periods is a classic economics of kirchnerism and especially the election years.
This guiding idea for odd-numbered years, and which traditionally discourages investments in the sector, responds to the improvement of the pockets sectors with low purchasing power and therefore higher relative purchasing power.
But the surge in inflation over the past three months (4%, 4% and 3.6%) He turned on the red light on the control panel of the economy and made it forget one of the main arguments on trade issues that the minister had developed. Martin guzman until the beginning of the year.
Guzmán had promised to keep the exchange rate indexed to avoid a exchange time this could lead to a devaluation jump.
This “music” sounded good to soften the ears of agricultural producers who, at the time, could not even imagine the rise in the price of soybeans that would come from the beginning of September. At that time, the tonne of soybeans cost US $ 355 and now walk $ 520. Because of this 46% increase, among other things, is that economists like Carlos Melconian say the government has won a lottery (more dollars and more collection) and there are several officials who recognize it.
Soybeans at US $ 520, plus export liquidations and more dollars that came to pay tax to the rich, laid the foundation for the new exchange rate policy now underway.
Guzmán no longer indexes the dollar but fixes it arbitrarily (it will increase by 25% in the year and will be $ 102.40 on December 31, he said) and, soon after, he made it clear that it would grow below inflation.
The wholesale dollar rose at a rate of 2.5% in February while the inflation was 3.6%. The policy of deferring the dollar to odd years that Miguel Bein defined in the early 2000s is back and the condemnation of two key senior officials: Vice President Cristina Kirchner and Buenos Aires Governor Axel Kicillof.
For a long time, the former minister has been convinced that the essential determinant of inflation in Argentina is neither the budget deficit nor the issuance of pesos by show of hands but what happens to the dollar.
And Cristina Kirchner explained this in her letter of October 27, 2020, saying that the bimonetarianism Argentina (trade in pesos but economy in dollars) is the country’s “most serious” problem.
It is from this diagnosis that Guzmán created the “dollar-Guzmán” of $ 102.40 and has gritted its teeth to pursue its 29% inflation target after, according to the first two months, the point cost of living increases by about 45% this year.
Just to get to 45% annual inflation This year, the index is expected to rise 29% at a pace of 2.9% per month since April.
In this context, the official strategy of delaying the dollar is decided with the exception of one limitation which is not minor: the shortage of dollars.
The government has reduced external credit, bond prices fall to levels close to those of the countries at risk It is at 1,620 points, so the strategy of establishing a “semi-exchange rate” will depend heavily on soybean dollars and import restrictions which businessmen claim will double.
Obtaining imports with prior authorizations or with direct agreements with the Central Bank or with the Ministry of Commerce appears in the panorama of the year with much more intensity.
If Guzmán sits on him official wholesale dollar, the data to follow will be the exchange difference, that is to say the distance between the official and the “counted with payment” or the blue one. Because? Because if it is very broad, the maneuvers of foreign trade (under and overbilling) will increase and the market can guess that the devaluation after the October elections would be great.
The “difference” The exchange rate is 65% and history speaks of exporters liquidating at 30% or less with almost no reluctance.
The timing is special: the government announces that the delay in the exchange rate may come hand in hand with the fact that a lottery has been drawn and that it does not consider entering into a deal with the IMF to aspire to obtain financing . Obviously, the calm dollar is a great sedative for economic stress to the point that it also banks policy imbalances.
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