In electoral key, the Government decided since the beginning of the year to use official exchange rate as one of the anchors for inflation. With the prices of the domestic economy rising above 20% in the first five months of the year, the Wholesale US currency rises just above 12%, which makes it look kind of cheap.
The exchange delay it is one of the constants in Argentina in the years where it is time to go to the polls. However, this 2021 has particular characteristics for analysts that give the Government room to continue slowing the rise in the dollar without affecting the competitiveness of the economy.
The real exchange rate started from a high ceiling
Unlike other election years, the Government had margin in 2021 to delay the exchange rate, since after the devaluations that occurred since 2019, and in comparison with the currencies of other countries, the real exchange rate started the year from a high floor. “From the point of view of competitiveness, looking at history, the real exchange rate is true that it does not look backward. It is at the levels of 2011“LCG analysts explained.
Martín Vauthier, Anker economist, agreed: “The government was able to slow down the pace of monthly devaluation, which went from following inflation in January, with a devaluation of 4%; at 1% per month in May. And he did it mainly because he started the year with an exchange rate that was not behind. ”
Greater firepower of the Central Bank
Thanks to the record income of dollars from the field, the Central Bank was able to buy US $ 6,000 million in the exchange market so far this year, giving you tools to control parallel dollars. “Since 2021 started, the BCRA intervened in the parallel market with sales for US $ 750 millions, so we estimate that it still has a cushion of more than US $ 5 billion to face possible devaluation pressures, “said Lorena Giorgio, chief economist at Equilibra.
This Tuesday the official dollar closed around $ 95.01; while in the parallel market both the blue dollar and the cash with liquidation ended in decline. The financial dollar fell to $ 165.63 and returned to below solidarity, something that is within the scenarios to which the monetary authority aspires. Thus, the The gap between the two quotes is now just under 75%.
“If it wanted, the BCRA this year has the firepower to keep the financial dollars at bay. In May we saw that it hardly intervened in the bond market to stop the rise in cash with liquid, and it only did so in the last business days of the month with sales of US $ 10 million a day, “added Giorgio.
Help from neighboring countries
The appreciation of the Brazilian real It serves the Government to support its strategy. “The lower rate of devaluation could be absorbed by the multilateral one, which has remained stable since the beginning of the year, partly thanks to the appreciation of the Brazilian real (+ 5.8% since the beginning of May). This indicates that there is room to wait for a deepening of the current exchange rate policy, “they stated in LCG.