The official inflation rates that are confirmed to be lower than expected each month not only force economists to correct CPI estimates forward but also force us to recalculate the speed of its opposite: the exchange rate appreciation process, which is less rapid. as expected and allows the Minister of Economy, Luis Caputomaintain the monthly depreciation rate of 2% announced in December after the strong exchange rate jump
Since it was announced, the consensus of economists warned that with inflation levels that were supposed to be around 30%-25% average during the summer, the monthly depreciation rate would be unsustainable and that the economy would quickly return to one of its worst evils. : the exchange delay.
The trend indicated by economists was indeed confirmed and the peso “rose” against the dollar, which remained stable in all its variants. However, the speed of appreciation was much slower than expected in December. The main reason is that inflation registered a minor advance and the Government for now maintains the 2% monthly devaluation.
In fact, with the inflation forecast of the Expectations Survey published yesterday by the Central Bank in which the surveyed analysts corrected their forecasts downwards, the BCRA’s multilateral real exchange rate index (ITCRM) for May will improve. “With the new REM data that corrects downward the expected inflation for April and May, the ITCRM should show a lower appreciation of the peso. When the inflation expected by the REM in April goes from 10.8% to 9% and that in May from 9% to 7.5%, the BCRA should correct the ITCRM series (it is corrected with each publication of the survey and when the INDEC inflation) on the rise (lower appreciation of the peso) from 91.6 to 94.5 for the last data reported in May,” recalled the consulting firm Aurum Valores.
Although better than expected, this indicator still continues to sound alarm bells. It is the same level that the ITCRM had in the months prior to the post-STEP devaluation in August of last year or, for example, also the same level as in March 2018, the month before the first exchange rate run that it faced. the government of Mauricio Macri and which would mark the beginning of a crisis in which the inflationary process gained greater speed to reach, during the following years already under the management of Alberto Fernández, record levels that also combined with strong exchange rate delays.
Just a few days ago, the president himself Javier Milei He faced criticism for the level of the dollar and gave 5 reasons why he rejected the questions. In a post on his official The almost zero gap, with the purchase of net reserves and cleanup of the Central Bank’s balance sheet and the “lifting of restrictions in the exchange market every day until one day it is completely out of the stocks,” are factors that contradict the notion of backwardness. exchange rate and are linked to a price adjustment.
“Therefore, are we facing a case of exchange appreciation or a case of rearrangement of relative prices where Argentina is expensive in dollars given its fiscal and regulatory structure?” he asked verbatim.
