ANALYSIS | The exchange rate in Argentina is coming to an end and the dollar is unifying on its own

( Spanish) – The Minister of Economy of Argentina, Luis Caputo, put in concrete terms the deadlines in which the barriers that still exist for the free operation of the purchase and sale of foreign currency in the country, the “exchange stocks”, a regulation established in 2019, will be eliminated. to control access and exit from the exchange market. In an interview with the TN news channel, Caputo said that “when all the conditions are met we will release it. Will it be in 2025? Yes, it will be in 2025, without a doubt.” The Government would thus fulfill one of its campaign promises.

When the minister talks about the conditions for lifting the barriers, he says that he refers mainly to the level of reserves of the Central Bank. To moderate expectations, remember that Argentina still has negative net reserves and that therefore the exact date of the decision cannot be estimated. In any case, he considers that this deadline “is not as important as they want people to believe.” And he gave a series of reasons to support his theory. He said that the economy will grow even without lifting the restrictions and that the investments that the country is already receiving are long-term, therefore these capitals do not give value to the exact term in which Argentina will regularize its exchange market.

Among the reasons for downplaying the validity of the stocks, Caputo mentioned one that the market has been registering in recent times: the de facto comparison of the different dollar quotes with the wholesale price. A gap that has been reduced since July and that would enable a less abrupt devaluation jump so that Argentina once again has a single dollar quote.

When on July 12 the informal dollar reached 1,500 Argentine pesos and the gap with the official dollar exceeded 60%, the Government made a decision. Beyond the idea of ​​deregulating and opening all markets, without the presence of the State, it would be necessary to intervene. For this reason, since July 15, the pesos used to buy dollars were “sterilized” (removed from circulation), to avoid a monetary expansion that would fuel the prices of the US banknote, which at that point were already aiming to disrupt President Milei’s economic plan. It was presented by Caputo as a monetary policy measure, but with a strong impact on the exchange market. From that day on, the Government intervenes in the Cash With Settlement market, through the sale of dollars purchased from exporters and in this way take the previously issued pesos off the street.

All this, added to the dollars that entered via foreign trade and the Asset Regulation Regime, better known as “money laundering”, generated a downward trend in the different dollar quotes. From that 60% gap on July 12, we arrive this Friday with a difference between the financial dollar and the wholesale dollar of less than 10%. The Cash With Settlement price is around 1,099 pesos, while the wholesale dollar is around 1,009 pesos.

With this panorama, some questions that arise are: how far can the dollar go down; Is there a de facto unification underway or is the trend going to reverse? While all this is happening, the Government is stretching the official unification that would require a devaluation, even if it is slight.

“The Government is not going to devalue, because a devaluation would mean accelerating inflation and it is focused on slowing down inflation. Therefore, any type of devaluation is completely ruled out,” says Mariano Gorodisch, an expert in economic affairs, in conversation with . He also warns of a challenge for the gap to continue narrowing: “We are going to have more pressure on the dollar, once the December bonus is collected. Especially due to Argentine reservations for international tourism, because it is cheaper in some cases to travel abroad than to spend the summer in Argentina. Therefore, everyone who leaves the country will need dollars. So, this is going to cause the blue (the parallel price) and the Electronic Payment Market (MEP) to rise a little when Christmas and the end of the year get closer.”

For his part, the former director of the Western Hemisphere Department of the International Monetary Fund, Claudio Loser, tells that he is surprised by the reduction in the gap between exchange rates and assures that it is a reflection of the fiscal and monetary adjustments. In any case, he agrees that the Government is not going to unify at this time: “Probably, the authorities are afraid that, upon releasing, people may appear who want to take advantage of this situation and withdraw dollars. “That can cause problems.” That is why Loser assures that the Government will wait to take exchange rate measures: “My expectation is that they will let the (austral) summer pass and, perhaps, in the fall of next year they will take the measure. I believe that the Monetary Fund will also be patient in that sense, especially because the differences between the official dollar and the parallel ones are very small.”

The Government continues, meanwhile, taking measures to further release the locks. It facilitates the entry of imported products and relaxes the pressure on financial dollars. But, apparently, there is still some time left for the final decision.