However, for him there is a risk of a price disparity between the peso and the dollar in this model of currency competition and he is concerned about this possibility. Thus, the form that seems most appropriate to him is “give the possibility of exchanging dollars for pesos to all who want and that both coexist and be established at a fixed exchange rate.
It is worth mentioning, on the other hand, that, Today, we have an economy that is largely dollarized. And there are new sectors that are moving in that direction. “For example, the technology sectors already have dollarized salaries and, in turn, there will be other sectors that, as part of a survival process, are also going in that direction, such as the food sector, which is very much governed by the greenback,” he says. economist Federico Glustein.
A program to strengthen the dollar
The truth is that the Government has already chosen its plan.If the Government continues with the ‘blend’ scheme for the liquidation of exports and the crawling at 2%, it harms the flows and the exchange stocks, indirectly negatively affecting the demand for pesos and therefore, influences a hypothetical future dollarization,” explains Garay Méndez.
Thus, although it is more than clear that the low demand for pesos is not a problem that has arisen in this Government, he points out that “the current course of the Interest rate, inflation and the dynamics of the dollar They generate inconsistencies that must be resolved in the short term, otherwise they will generate problems in the economy.”
In this framework, it is very evident that the direction is being consolidated, little by little. towards a coin competition in which dollarization appears to be “natural,” according to Milei because, as Glustein mentions, “the peso, from now on, has less ground gained, because it is a currency that has always suffered devaluations and is more inflationary than the dollar, while the latter is transoperable, is accepted globally and has less history of inflation, among other attributes.”
Milei’s bet: people will “naturally” dollarize
“I interpret it to refer to stop issuing and the supply of pesos must appear due to dollar detachments of the people,” mentions the economist and director of MyR Consultores, Fabio Rodríguez.
In the same sense, the economist Christian Butelerstates that “what the president meant when talking about a natural dollarization is that he is going to propose the free choice of currencies and that people will increasingly begin to transact in dollars, to the detriment of the peso.”
This will happen, as proposed the economist Pedro Gaite, from FIDE, in a context in which “The peso and the dollar will compete freelyboth of which are legal tender, and Argentines will choose the dollar as their currency because the president believes it is the strongest currency and will eventually become dominant.”
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The currency competition proposes a coexistence of the peso and the dollar, both legal tender.
Depositphotos
That is to say, what Milei said is that Dollarization will happen because people will start choosing to transact with that currency. and not with the weight. This would resolve a key element that Gaite mentions, that “to advance dollarization, a flow of dollars must enter so that the economy can function.” The Government’s thinking logic is that people will want to spend their greenbacks.
Now, a question that remains floating is what will happen if Argentines resist using the dollar transactionally and want to continue seeing it as a savings refuge in the future. “They hope that people can bring their money from abroad and put it back into the economy.but many are unlikely to want to spend their foreign currency holdings,” Gaite admits.
And it is that The variable of unpredictability and what can happen in the event of a possible change of government is a topic that is present in our DNA. That may encourage a resistance to “releasing” the dollars by a large part of the population, but the truth is that, if more pesos are not issued, at some point, there may be no more option and thus, although with some delay in starting, the dollarization plan advances just the same. “The incentive for people to invest their dollars is going to be, more than anything, necessity in this case,” says Gaite.
