Everything indicates that another month of relative tranquility is coming for the exchange market. On the one hand, the Government will maintain its policy of gradual adjustment of 2% per month for the official exchange rate, but at the same time everything indicates that financial dollars will remain flat in May for a series of reasons.
April was a month of great stability in the exchange rate and the different dollars remained in a limited range below $1,100. The peak sell-off season for coarse crop dollars will surely make itself felt in the coming weeks.
It is not just about a greater flow of foreign currency that will surely allow the Central Bank to continue accumulating reserves. In addition, the possibility of settling 20% through Cash with Settlement is maintained. This ensures a supply of foreign currency through the financial market of between USD 35 and 50 million daily.
Everything looks like May will be another month of great stability for the exchange market. The Government is determined to maintain the 2% monthly adjustment of the official dollar to force a drop in inflation. At the same time, the supply of agricultural dollars will increase, while the fiscal plan would also collaborate in the same direction.
This is a seasonal factor that will continue at least until June and will be key to keeping prices at bay. But clearly it will not be the only thing that will affect keeping dollars very controlled.
The fiscal package approved for now in Deputies and that would be discussed shortly in the Upper House also includes aspects that will help in this task. One that can have a significant impact is money laundering, which will surely take dollars out of the “cushion,” increasing supply. There would also be incentives to enter foreign currency from foreign accounts and deposit them in a local account. In that case, if the money remains frozen until the end of 2025, the 5% rate provided for the first stage would not be paid.
Although it is not clear what the volume will be on this occasion, it is estimated that the figure will be much lower than the USD 115,000 million that went into the money laundering promoted in 2016 by the government of Mauricio Macri. On that occasion, the proposal lowered the exchange rate and increased the inflow of foreign currency, especially in the weeks prior to the closing of the first stage (which was the most convenient, just like now).
The project also includes an attractive proposal to enter five years of Personal Assets with a rate of 0.45% per year instead of the current 1.5%. It is assumed that there will be a lot of interest to enter this scheme, which will surely require many taxpayers to go out and sell dollars to pay the AFIP. The same would happen in June with the annual Earnings due date. Therefore, tax obligations will play a significant role in keeping the exchange rate in check.
Of course, the continuity of the exchange rate also plays an important role. Yesterday the President made it clear that at the moment there are no plans to move forward with a relaxation of controls. In an interview, Javier Milei indicated that one of the issues that must be addressed is the way to face the payment of dividends that multinationals have stopped for about five years.
In the market they estimate that the figure is close to USD 10,000 million and from the Central they let it be known that new Bopreal could be issued so that multinationals can subscribe, just as they did with importers.
This scenario of stability in exchange rates and exchange gap that remains below 20% also favors lower inflation. In April it is estimated that it would already reach single-digit levels, after five months, but in May it could drop to values of 5 or 6, due to the tranquility in food prices, the fact that rate increases were postponed and the lowering of prepaid fees.
