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Due to the advance of inflation, the free dollar is at its lowest real value in the last five years - Infobae
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Por el avance de la inflación el dólar libre está en su valor real más bajo de los últimos cinco años
Con un IPC que en el último año se acercó al 300%, las cotizaciones libres se desplomaron en términos reales a su paridad más baja desde las PASO de 2019
www.infobae.com
April 15, 2024
With a CPI that approached 300% in the last year, free contributions plummeted in real terms to their lowest parity since the PASO of 2019
By Juan Gasalla
(Illustrative Image Infobae)
In recent months, the Argentine economy has been going through a process of high inflation - the highest since 1991 - and a drop in activity . This conjunction had, from a strictly financial level, a central victim: the price of the free dollar .
With strict exchange control in force since the end of 2019, Argentina went through the crisis due to the coronavirus pandemic, a deepening of the macroeconomic deterioration - with the depletion of foreign currency from the Central Bank and an unprecedented monetary issue since hyperinflation - plus the recent political tensions over the electoral calendar.
This framework was conducive to alternative dollars, when it is known that the greenback is a traditional refuge of value for Argentine savers. These reached maximum prices in real terms in October 2020 (Covid-19) and October 2023 (presidential elections).
However, with the jump in the official dollar in December (+118%) and the inflationary shock (double-digit monthly rates since November), the free dollar - which is worth the same today as in November - returned in real terms to its price. lowest in almost five years , with an exchange rate gap at its lowest since October 2019.
Salvador Vitelli , head of Research at Romano Group, specified that the current “cash with settlement” parity is “reaching pre-STEP 2019 levels ,” since “in today's currency,” that is, considering the evolution of the Rate Index. Multilateral Real Exchange Rate ( ITCRM ) that measures the BCRA and North American inflation, the “liqui”, now at $1,047, is close to the level of August 9, 2019. Then, when there was still no “stock” (the September 1 of that year) the official dollar reached 45 pesos, equivalent to $1,010 in the present.
Fuente: Salvador Vitelli ("X": @SalvadorVitell1).
It is also worth highlighting the reduction of the exchange gap , now in the 15% area, the smallest since October 16, 2020 , when it reached 10.5% (then with an official dollar at $58.35 and a “ blue” at $67.50). With dollars stabilized in convergence and a minimum gap, there are analysts who find the moment favorable for an eventual exchange rate unification.
The inflationary impact of the last semester did not only hit the purchasing power of free dollars. The official exchange rate also suffered despite the devaluation in December and the ITCRM again fell below 100 points of theoretical equilibrium in April. Last Friday the 12th it reached 96 points, a level similar to that of September 2023.
The devaluation applied by Argentina's main trading partners also influences this . Almost without inflation, the dollar in Brazil will increase by 6.8% in 2024 (from 4.85 to 5.18 reais) and in China it will advance 2.3% (from 7.08 to 7.24 yuan). In the same period, the official exchange rate in Argentina rose 60.05 pesos or 7.4%, against an inflation of more than 50%, while the “blue” dollar lost 20 pesos or 1.9%, against $1,005 for sale.
What's coming: recession, inflation and exchange rate
“With the entry of the thick harvest , we expect to see an increase in the pace of BCRA purchases, which slowed from a recent peak of USD 311 million (five-day moving average) to USD 192 million on Friday. According to our calculations, the soybean and corn harvest is valued at USD 30 billion at current international prices. If the 80/20% scheme remains in place, roughly around USD 6,000 million would be channeled via the financial market , which would deepen the decline in cash with settlement in the event that the stocks remain without significant changes," they predicted. the experts at Portfolio Personal Inversiones .“We could begin to see some change of pace in the performance of financial prices due to surprises in the pace of disinflation - the market is very optimistic - and alterations in flows. On the demand side, the gap with the import exchange rate (with PAIS tax of 17.5%) is only 4% , and at any time importers could have incentives to go via cash with settlement and not MULC” said a report from GMA Capital .
“For the current year, a sharp drop in activity is expected, of around 5%, and in the inflation rate, which would be around 160% annually. The accumulation of BCRA reserves has motivated some proposals to accelerate the lifting of the exchange rate,” said a report by FIEL (Latin American Economic Research Foundation). “However, it is prudent to delay this decision until the problems of accumulated stocks of foreign currency demand are resolved,” he added.
Puente analysts specified that “in Argentina, inflation expectations for 2024 were reduced to +203.8% annually, while the March measurement recorded +11% monthly, lower than the +12.4% expected, and "+287.9% year-on-year."
Source: GMA Capital.
“Neutral or slightly positive rates will likely arise as a result of the easing of exchange restrictions. Meanwhile, the 'liquefaction' of deposits will continue, but at a slower speed than in the summer,” estimated Delphos Investment .
Economist Camilo Tiscornia told FM Milenium that “the most critical issue is the recovery of economic activity. It would be the complementary part so that the drop in inflation is not only because we are in recession, but because there has really been a change in economic policy. "I don't think the Government is in a hurry to release the stocks."
