“The monetary base has been nominally stuck since the end of December,” Javier Milei usually explains when asked why “free” dollars are falling. The President accepts the translation of that concept for laymen: Without pesos you cannot buy dollars. In the market they trust the first fiscal and monetary results of the Government, and although some questions are accumulating about the exchange rate, They dare to anticipate that this will once again be a month of calm.
The blue dollar closed at $985, about $40 less than at the beginning of the year, after an inflationary flash – now decelerating – driven by the December devaluation and a liberalization configured with the objective of prices once again being the computers of supply and demand in the country.
The CCL and the MEP, instruments that are used when there are stocks to withdraw dollars from the country and buy foreign currency formally, began 2024 well above $1,000 (up to $1,300) and have now settled around that symbolic mark.
To stick to the presidential explanation, Ieral, now led by the economist expelled from Anses, Osvaldo Giordano, replacing Carlos Melconian, is forceful: “The net issuance of monetary base was only 0.4 trillion in the first 100 days of the Milei administration, with a variation in primary spending that in the first two months of 2024 validated less than half of the inflation of the period.”
The monetary base contracted in real terms by 39% since the beginning of December and the Treasury accumulated a financial surplus in the first two months. It could be the first trimester. “A monetary and fiscal turnstile aimed at limiting the transfer to December devaluation prices, as a way of laying the foundations for the next steps of the roadmap,” he stated. The drop in inflation is not instantaneous and has its flipside: recession.
The start of the dollar season
“We are entering the period of greatest supply of dollars. There is seasonality and the program is anchored,” They trust the economic team when they are consulted about the prosperity of the financial indicators.
The country risk closed just above 1,300 points, a figure that has not been seen since 2020; Reserve purchases have already exceeded US$12,000 since Milei took office (in the short week, the Central Bank acquired more than US$1 billion) in the Casa Rosada, dollar bonds continue their rally rising, Rofex futures (the long-term dollar) fall and Treasury bond rates compress. Even so, the party is not complete nor will it be until the stocks are lifted.
Argentina is entering the period of dollar abundance. The thick harvest has already begun with corn, soybeans and sunflowers will follow, and corn will close (it extends further over time). “I don’t know what the cereal companies will do with the margin balance. There is a part that they have to liquidate,” they say in the economic team. “They are going to liquidate some due to harvest pressure, but they are going to keep the rest,” they answer from the export sector. Rural men are waiting for a better exchange rate taking into account the high costs they face and the drop in commodity prices. commodities Worldwide. According to data from the Buenos Aires Stock Exchange, the advance of the soybean harvest is 1.9%; from corn, 11.1%, and from sunflower, 90%.
According to Geres, the current dollar blend –80% to the official and 20% to the CCL– It already reaches levels below the “soy dollar” created by Sergio Massa. “Since December 11, 2023, the BCRA has recorded the longest period of net foreign currency purchases in recent years, under the protection of a strong restriction on import payments and the significant drop in imports due to the recession,” they indicated. .
The dollar blend and the CCL have a very small gap, and according to Geres, in this framework, the tools to improve the numbers for the export sectors are limited.
“The reduced gap makes the modification of the blend [¿con otra baja de tasas de interés?]. Increasing the price of the CCL would quickly neutralize the increase in liquidations”, they explained. “And reducing the rates of withholdings or the PAIS tax for importing inputs in a context of generalized drop in revenue, with the exception of these two taxes, collides with the goal of zero deficit pursued by the current administration,” they closed.
Beyond the doubts, in Economy they feel that the drop in dollars and financial indicators They are a sign that the “delivery” is materializing. This is a concept that Luis Caputo introduced in the last Cicyp meeting with the red circle. There he explained that, in any developed country, the word of the Minister of Economy or the Central Bank easily shapes expectations. In Argentina, palpable results are first necessary: cash in order, controlled issuance, positive implicit rates in dollars (for the carry), accumulation of reserves “almost” already at net positive levels, and, above all, falling inflation.
“The blue goes down because you are drowning the market; many have to sell [blue] to end the month. They are in the dissavings phase,” translated by a Peronist financier, who finds in the accumulation of foreign currency and the reduction in spending the main drivers.
“It’s falling like a piano.”, they say in Economía about the prices of the first days of April. With an installed capacity at 54%, demand for money at 2.5 of the GDP and recession – they point out – they are sinking. “There are no longer macro reasons for inflation,” They add in the corridors in which, they trust, March maintained a declining trend compared to February and they see core inflation – without tariffs – that moves to single digits in April. In that framework, but still with an exchange rate, near Milei they hope that the dollar will not bother them for a while.