One of the scarce self -criticism that Javier Milei was heard in recent days was the failure of “endogenous dollarization”, that is, the plan so that, before a restrictive monetary policy, people began to use dollars for everyday expenses. Actually, there was some dollarization, but it was limited to the areas of tourism and purchases by Courier, in addition to the mortgage market, dollarized for decades.
It sounds strange that Milei, who usually has on hand a theoretical statement for each situation of the Argentine economy -as he did with Menger’s imputation principle To explain where the merchants who highlighted prices were going to be stored-not remembered one of the laws most frequently associated with Argentina: Gresham’s law.
It was stated by an English merchant of the 16th century who advised Queen Elizabeth and realized that, since the use of metals to make coins, those that had a greater proportion of gold were jealously stored in the chests while those who had the most silver were circulated in the markets.
Thus, Ta Gresham observed a phenomenon that would be established as One of the basic laws on money: when two coins, a good and a bad coin, in a country, people tend to use the worst quality to make payments, while retaining the best reputation as a way of preserving their capital. Therefore, the good coin is not circulated much, While the bad changes from hands at full speedbecause nobody wants to keep it.
It is a simple principle and anyone understands it intuitively. For now, millions of Argentines have been applying that principle enthusiastically for decades. And not by chance it is estimated that there is More than one million chests destined to protect dollars, even if they do not pay any interest.
Since years, it is the obsession of all Argentine governments to find a way that citizens get those dollars of their hiding places to inject them into the financial system -and, incidentally, help reinforce the BCRA reserves. Luis Caputowhich is in Washington for the semiannual conference of the International Monetary Fundconvinced the very Kristalina Georgieva to make an order in that regard.
The IMF director highlighted the productive leap that the country could give with a financing of about US $200,000 million that are now under the mattress, and expressed their desire that post -stock exchange stability helps that goal.
Dollars: the carry trade versus the mattress
It is the new government mantra: Who stays with saved dollars, loses money. They are repeated economists, investment banks and consultants related to the government, and give examples about the profits that can be obtained with the reborn carry trade if placements are made in pesos at more attractive rates -in fixed income, the last LECAP offered 3.75% monthly cash.
For now, there are all kinds of speculation about How much money will be entered from abroadthanks to the new regulations of the Central Bank, which enables the free flow of financial capital -with the permanence requirement in the country for six months.
On the other hand, the panorama with agricultural producers is much less clear, to whom the government had already tempted, at the beginning of the year, to liquidate the entire remnant of crops saved in the silobolsas and that they would take advantage of to place themselves in pesos To make profits with the Carry.
The majority rejected that treat, and to this day it is poleminated in the field with respect to whether it won the most who sold and placed in titles of sovereign debt or who waited two months and sold when the export price improved.
But what surely will not happen is that small savers are tempted to sell the dollars of the mattress. It is true that these days The “punishment effect” is operating On those who believed that a devaluation jump would come and came to pay over $ 1,400 for a dollar in the financial caves. But that does not mean that the demand is now reversed due to the fact that the new fluctuating dollar threatens to break the $ 1,000 floor.
As several Argentine economists have already studied, with the dollar a peculiar phenomenon occurs that makes the demand continuous: if it goes down price, it is perceived as Purchase opportunity Before a future rebound, and if you rise in price, there is also a stimulus to the purchase for the fleeing syndrome of the weight.
Inflation: a post exchange exchange shock
This attachment to the dollar means that, even if descending inflation is resumed -such as many economists project that it will occur with the April CPI -, also follow the concern about the other inflation, which is measured in dollars.
It is the “b” of exchange stability and the strength of the weight that the officials of Toto Caputo celebrate: the more the price falls, the more relevance it takes the comparison of Argentine prices with those from abroad, measured in dollars.
In other words, the lifting of the stocks not only The controversy did not take from the agenda for the exchange delaybut exacerbated the debate.
To put it in numbers, consultants who make their own surveys estimate that in the last four weeks there was inflation of 3%. But if inflation is calculated in dollars, taking as a reference the prices of the parallel market, the increase was much greater.
If the price is calculated to the “counted with liquidation” -which in a month fell 12% -then the inflation in dollars da A shocking 17%. Yes, something that four weeks ago cost 100 dollars to CCL value, today it costs 117. The same goes for retailers who make the comparison taking as a reference to the blue dollar.
Inflation in dollars It is attenuated if the calculation is done with the official dollar, Since the price is maintained – now – above the previous one to the stock of the stocks. Even so, the 2% devaluation is lower than inflation. So, also in this case, the situation that marked the tonic of the year was repeated, with prices rising more speed than the dollar.
In it accumulated of the year -As moving that the April IPC appears around 3%- prices will have increased 11.8%against a dollar that moved 7%. Implies, in four months, An inflation in dollars of 4.5%. To the parallel dollar, on the other hand, the price in dollars returned to the start of the year, after having fluctuated with a 15% peak at the beginning of April.
The prices that are coming
But those numbers talk about the past. Now what the market wants to know is If the increase in dollars can be aggravated As a consequence of the lifting of the stocks and, consequently, the competitiveness problems of the economy will be more patent.
For now, the market is already talked about on an acceleration in the orders of Chinese merchandise -which is still strange, because before the lifting of the stocks it was presumed that a brake would come to imports.
It is a particularly difficult time for projections, given the uncertainty that the new exchange scheme awakens. In principle, the expectation of economists is that agricultural export, added to the achievement of A new loan “Repo” plus the income of external investments, They would keep the exchange rate lying on the band’s floor. That is, there is room for the nominal contribution to continue falling.
And as for prices, if the prognosis of the remote survey is considered before the stock of the stocks – between April and June an inflation of 6.4%will accumulate. Of course, these numbers were immediately reviewed by the consultants: with the initial reaction of the dollar – and the fear of the “infection effect” – many predicted that the IPC would be located every month above 3%. They are figures that, after the reverse of the increases, are again being reviewed, but down.
In any case, what everyone is providing is that the dollar increes process could be accelerated. When the crawling peg Of 1%, inflation in dollars remained around 1.5% monthly. Now, if the government’s prognosis on the “monetary anchor” and the appreciation of the weight, Inflation in dollars will begin to travel to more than 2% monthly.
In other words, comparisons regarding how much it costs to take a cut in Buenos Aires compared to Madrid, Rio de Janeiro or New York will be the order of the day.
For the Milei government, the political option was clear: it prefers to return criticism about exchange backwardness Before facing the months of the electoral campaign with exchange volatility.
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