Why buying DOLLAR today is the worst deal, according to the City guru

We are going to give a series of reasons why we believe that The dollar is not going to rise. First of all, there is the issue of sfinancial surplus and lower issuance.

The Government has achieved a financial surplus in the first 4 months of the year. We went from having a deficit to a surplus, which implies that we went from issuing pesos to finance it to not issuing pesos. This single measure helps, with fewer pesos on the street, inflation and the exchange rate gap to fall considerably. The rise in inflation is affected because within the framework of readjustments of budget items the States reduced subsidies to public services.

By May, the Government hopes to have achieved a fiscal surplus again, but the effort is increasingly greater, since they have to lower expenses, in the face of income that rises very little due to the economic recession. As long as this golden rule is maintained, the dollar will remain flat.

For four months, the Government managed to maintain the financial surplus.

2. The BCRA continues to accumulate reserves

The Central Bank of the Argentine Republic (BCRA) continues buying dollars in the marketand therefore the reserves are recovered, which as of December 7 stood at US$21,209 million, and today stand at US$29,065 million.

They did not reach US$30,000 million due to the delay in field settlements.

3. Balance dollar

The monetary liabilities of the Central Bank as of December 7 were $21.07 billion, while we estimate these liabilities as of May 31 at $20.2 billion, as a result of the transfer of almost $15 billion of Central Bank liabilities to treasury debt. . The relationship between monetary liabilities versus reserves gives us an equilibrium dollar of $1,223, nothing that suggests a shooting of the dollar.

The debt that the Government of Cristina Fernández left us in 2015 was US$268,091 million, and Alberto Fernández did not leave us US$488,015 million, here the debt of the treasury plus that of the Central Bank is added. It would give the impression that we are a little in debt.

The relationship between monetary liabilities and reserves does not give signs of an eventual rise in the dollar.

Why could the dollar rise?

The dollar could rise if the Government does not achieve a fiscal surplus in the coming monthsit is impossible for the Central Bank to capitalize, or it issues money without support to make some extraordinary expense.

Under the principles that led the President to win the elections, It would seem that none of this could happen. However, there is an effort to introduce the probable rise of the blue dollar into the debate.

At the international level, from 2008 to November 2021 we experienced secular stagnation, with low levels of inflation and interest rates. In Argentina, during that period of time, we experienced terrible government administrations, with governments that had fiscal deficits and emissionsthat meant that, during that entire period of time, the Argentine who bought dollars and kept them in the can (safety box) earned money, feeling like an experienced financier, almost Gordon Gekko, the villain of the movie Wall Street.

From November 2021 onwards, the United States Federal Reserve began to raise the short-term rate, to levels of 5.0%, this competes directly against the can that does not leave any interest rate. In Argentina, the economy stopped having deficits and uncontrolled emissions, so the reasons why the dollar gained purchasing power internally ceased to exist. Now having dollars causes you to lose purchasing power.

Those who continue buying dollars persist in thinking that the economy is the same as between 2008 and 2021, and do not realize that many things have changed from 2021 onwards, the consequences of the pandemic, more inflation, rate increases and war conflicts that will cause the dollar to devalue in the world in the future.

To leave you the last pearl of dessert, I leave you the fiscal result of the American treasury for the year 2024, 6.8% of GDP.