The government's strategy to stop the dollar

At Casa Rosada, where they plan the electoral strategy in detail, they know that, beyond what the polls say, a violent movement of the exchange rate could harm Cambiemos' ambition to be re-elected.

President Mauricio Macri has been clear, but he has already used a silver bullet to try to break it and, if necessary, he would be ready to do it again.

"The Fund claims that the Fund holds us firmly in the hands, but we will not kill ourselves politically, if everything gets complicated, we will use the reserves", Frankly admits a key man of the economic team, according to La Nación.

"Thinking something different does not mean how the world works, it's a political problem: a sovereign country makes sovereign decisions, then the council [del FMI] will approve or not. We talk about it, although it is not necessary, "he continues.

For weeks, the tension on the foreign exchange market is obvious. Friday, a few hours before the board of the International Monetary Fund publishes $ 10,800 million for Argentina, the currency has reached a new high: $ 45 in banks and bureaux de change. At the Treasury, they hope that the offer next week will be presented and that the pressure will begin to subside.

On Monday, December 15, the Treasury will begin with daily auctions of US $ 60 million – for a total of US $ 9,600 million – agreed with the IMF, and hope that, at the same time, the soybean harvest dollars will come in.

"Even if they liquidate half of the crop, they will have more dollars than last year," they are enthusiastic. In order to know directly the situation of grain producers, individual meetings were held last week with some of them at the Treasury.

But despite the constant optimism they manifest at the headquarters of Hipólito Yrigoyen 250, the the possibility that the election that has been raised as an "all or nothing" continues to punish the peso is not totally ruled out.

The economic team does not lose the opportunity to raise in front of the bureaucrats of the Fund the need to allow the BCRA to use its reserves to intervene in the foreign exchange market even before the dollar reaches the ceiling of the bandalthough they admit that it is almost impossible to get technicians out of their manuals.

It does not matter that even the chief economist of the World Bank for Latin America and the Caribbean, Carlos Vegh, said last week in Washington that he "thought that Argentina could intervene within the exchange band ".

"My position, in general, is that the Central Bank reserves the right to intervene to appease currency fluctuations," he said, in line with the views of most local economists .

Given the loss of the battle, government members confessed that "privately, faced with a stressful situation, they could come back to appeal the strategy that had resulted in the expulsion of Luis Caputo from the BCRA last year. The approval of President Macri is. It was also at this time that Caputo fought with the IMF to contain a currency exchange that was likely to turn into a banking operation (at the height of the crisis, deposits in dollars had fallen by 6% in two days).

Only It remains to be seen whether the president of the Centrale, Guido Sandleris, or the Minister of Finance, Nicolas Dujovne, are willing to propose rockets in such a scenario. It's more than a matter of stoicism.

Those who participate in economic decisions reveal that the Proceeding from Caputo had been discussed with the President. Even though it was Caputo himself who offered David Lipton, number two of the IMF, his resignation in exchange for his power to operate freely to calm the foreign exchange market. "Toto's is literally exploding because there was no other way out," recalls a source who continues to participate in the government.

Caputo insisted before the IMF that it had reached a point where a further devaluation would only worsen the recession and boost inflation. Defenders at all costs of a floating system, the Fund's technicians have estimated that the exchange rate should find only its price of balance. The results of their manuals are in sight.

A year after the first wave of trade, economic activity barely managed to show its head and inflationary inertia reached a rate at which the models of the technicians of the body could not even glimpse. "The results in terms of inflation have been disappointing, "said IMF Managing Director Christine Lagarde on Friday.

The only consolation for the government? At the Treasury, each point that increases the average annual inflation above the budget improves the budget result by 0.05% of GDP.

Faced with an economic fragility that does not predict bad news, the authorities' decision would be to avoid attempting measures that do not have a predictable impact on the market. BCRA's intention to offer letters to banks – the Leliq – at 30 days to encourage a rise in fixed-term rates would have fallen into this logic.

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