Prepare arguments to convince the Fund of the benefits of buying dollars

From the executive, we know that the difficulty of keeping the dollar within the agreed limits was not in line with what was negotiated at the time by Finance Minister Nicolás Dujovne in Washington, while Mauricio Macri's envoy to agree on the new terms of the second agreement were concluded last year with the IMF. Cardarelli had recommended, when the first pact negotiated in July 2018 had failed, that the best thing for Argentina's exchange policy in the circumstances of that moment was to freely quote the currency for it to find the price. In other words, do not use the dollars of the agreement with the IMF to finance the outflow of dollars.

The idea of ​​creating a no-intervention zone was proposed as an alternative during the September negotiations in the United States. It was an idea that the current president of the BCRA, Guido Sandleris, had brought to the table at the time when he was at the head of Treasury advisers, before Mauricio Macri appointed him to the head Central. The idea has been accepted by the IMF on the condition of limiting the sale of foreign currency to a ceiling of about 150 million dollars.

zoned

At that time (mid-September 2018), it was thought that the most important risk was that the dollar would quickly quote on the roof of the region and that this would end up being a support to stabilize the devaluation that dragged Argentina since April. . At no point during the discussions in Washington, did the opposite alternative occur, namely that the dollar had reached the ground of the region, had been the object of debates. And less than the duration of the scheme is consolidated and reaches a third stage from the first quarter of 2019, and with a recalculated adjustment of 3% monthly initial to 2% monthly inaugurated last January. Given the new situation of the BCRA with regard to the purchase of foreign currency, unprecedented in all negotiations with the IMF, it is badumed that the emissaries of the agency will mention the novelty and will put the focus on the only aspect likely to worry visitors: the purchases of dollars are done with pesos that broaden the monetary base. The official commitment made to the IMF had been, in return for the application of the zone, to maintain the emission of pesos to the maximum limit accompanying the zero deficit commitment set by the Government. Therefore, the Excel presented to the men and women of Cardarelli insists that the purchase of dollars will be harmless, at least during the first quarter of the year. Then, and subtracting the approval of the emissaries of Christine Lagarde, the intention is to confirm the approval of the IMF for the application of the zone until at least June of this year, with the same indexing scheme of 2 % per month.

Casa Rosada is convinced that the invention of the "zone" is the greatest success of the Mauricio Macri government's exchange stabilization, after the first years of management of the monitoring of the monetary evolution and the controversial intervention of Luis Caputo in August. Past Within the official political wing, there is even talk of adopting the concept of "zone" as one of the contributions of the economic team to the election campaign as a contribution exchange rate stabilization after the 2018 controversy. It is recalled that, after a start of doubt (the international organization is never a friend of fixed or indexed index systems), the IMF was convinced of advantages of the system, since it served as a stabilizer for the expectations of devaluation criollas. The last cucarda was received by Macri himself when he received Christine Lagarde at the G20 summit in Buenos Aires the first week of December 2018. This blessing gained added value by mentioning that Lagarde was not not convinced of the mechanism and that she chose, during the negotiations of last September, a strategy of liberation of the rate of exchange until it finds its own point of equilibrium.

All this time will work in parallel for BCRA to monitor the other two key variables of monetary policy and exchange rate policy: the evolution of monthly inflation and, consequently, the daily interest rate policy of BCRA. Leliq. In this last point, of the political wing of the macrismo, everything is a positive expectation and an enthusiasm in which, towards the end of the first trimester, the rates reach 40%. In the entity, there is only caution and strict defense of the "step by step".