Nicolás Dujovne could sell more currency to calm the dollar and reduce inflation – 14/03/2019

The authorities of economic conduction announced yesterday measures aimed at bringing calm to the Change market in the next few days and at the same time on the inflation expectations after yesterday's rise in February prices (3.8%), standing at 6.8% in the first two months of the year.

On the one hand, the Minister of Finance, Nicolás Dujovne, revealed to Washington that since April, the Treasury will sell $ 9,600 million US until the end of the year, based on daily calls for $ 60 million US dollars. Shortly after, in Buenos Aires, the head of the central bank, Guido Sandlerisannounced a tightening of the monetary program.

In an interview with Argentine correspondents in the US capital, among which ClarinDujovne said the $ 9.6 billion that the Treasury will begin selling from April is a measure that will be reflected in the technical report of the International Monetary Fund's expert, Roberto Cardarelli, who comes to arrive to review the figures in Buenos Aires Aires, ends to raise in the coming days to the Council.

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Dujovne met Wednesday with the director general of the IMF, Christine Lagardeand, although he said that it was a "protocolary" visit, there is no doubt that, from a technical point of view, he was working on this new package which will be included in the Cardarelli follow-up report. The Fund has never been very supportive of the fact that borrowed money has been used to stabilize the exchange rate, but they now see this initiative as achievable, knowing perhaps the strong impact that the rising dollar tends to have. in Argentina.

The advice – which should meet in the next two weeks – will badyze this report to approve the disbursement of a new tranche of the confirmation agreement, this time of $ 10,700 million.

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The announced measures and negotiations with the IMF are known after an escalation of financial volatility and a worsening of expectations regarding the Argentine economy. In a month the price of dollar increased by 6.2%, the country risk rose from 680 points to 735 – last Tuesday, 783 – the expectations inflation for the year went from 29% to 31.9% and, as a result of the plant's reaction to the bad signals, the interest rate It increased by 2000 basis points.

Sandleris yesterday announced four measures for the coming months: extend until the end of the year the objective of zero growth of the monetary base, permanently establish the excessive level of compliance of the base with zero growth, eliminate the seasonal adjustment from the base for June and set the floor and ceiling of the no-intervention zone to a rate of 1.75% per month. The power plant announced these announcements after the release of the CPI in February and after the words of Dujovne.

In an interview with Clarinsaid the minister, "Argentina today has a level of liquidity as it has never been in recent years, with $ 12 billion in cash," he said. stated that one of the problems they faced up to the end of the year was that they "had more pesos than the peso sources, with which we need to convert from foreign currencies in pesos ". And he added the details of the plan: "It will begin in April for $ 9,600 million in calls for daily bids for $ 60 million and will continue throughout the year. year, until November, December ".

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Dujovne sought to clarify that the current regime is not intended to maintain a dollar price. The IMF is against the manipulation of the currency. "The BCRA has a non-intervention zone, does not intervene outside the zone.We will issue bids where the dollars will be sold at the current exchange rate, as part of a transparent operation. , and the goal is to make us pesos, not to make exchange policy ".

– Are they guaranteed to avoid another currency cimbronazo?

– What we guarantee is the macroeconomic stability of Argentina. We have a very powerful tax system, a tax adjustment of almost 3 points of GDP this year, converging towards the primary balance, which we have not had in the last 10 years. We have a very strong monetary policy of the BCRA that is very consistent, a system that gives a lot of predictability to how the central bank is acting, and in that context, we believe that macroeconomic stability is guaranteed.