After two years of prioritizing the cheap dollar as an anchor for low inflation, the administration gave in to pressure from Washington to bolster international reserves. The announcement of the Update of inflation-linked exchange rate bands confirms a pragmatic turn: the economic team Abandon the speed of disinflation in an attempt to improve and drill Argentina’s credit profile Country risk which refuses to break through the barrier even after Bonar 2029’s tests 600 basis points.
The good reading of the market is that the “remonetization” The strategy put forward by the Central Bank (BCRA) aims to give the monetary authority the ability to buy foreign currencies by allowing the exchange rate to rise without intervention, but the price of this “flexibility” is a Highest floor for prizes.
A former head of headquarters explained in confidential To PROFILE One of the biggest challenges that new engineering brings with it: “The acceleration of devaluation will limit inflation inertia unless the recession worsens.“. The reason for this is that by indexing the cap of the band to the past CPI, expectations are fed back. To prevent the “remonetized” pesos from migrating to the dollar, the source’s diagnosis is that they need “one”. high exchange rate in pesos or for local dollars to prevent escapes.
Questions about the BCRA’s ability to make disinflation compatible with reserve accumulation without deepening real appreciation
Recalibrated bands
In a press conference attended by this medium, the head of BCRA said, Santiago Bausiliinsisted that “The new exchange rate system is in line with the downward trend in inflation” and defined the measure as “a contribution to reducing uncertainty“.
Some voices in the market assured that the effect was the opposite. Just a month ago, the Minister of Economics, Luis Caputohad assured the FIEL Foundation that they were gangs “well calibrated”who defends the rigidity of the exchange rate cap. When questioned by the press yesterday about this change, Bausili claimed that even if modified, it is still “the best regime” and that adjusting for inflation does not mean a “higher or lower” dollar, but rather one “greater degree of flexibility”. In financial jargon, this flexibility is read as Forced correction due to currency shortage.
Under pressure from the IMF and markets, the BCRA adjusts the dollar for inflation and announces a reserve purchase plan
Inflation aside, the announcement leaves major doubts financial sustainability of the reserve building plan. The Economist Pablo Moldovan Put the numbers on the challenge facing the government for 2026. According to its analysis, the BCRA proposes two conditions for the purchase of reserves: that the Demand for pesos and there is Dollar offer enough.
“The first condition seems simpler. When the economy grows, the demand for pesos grows.” The second condition seems much more difficult.“Moldova warned.
The external sector figures for 2026 are at the limit. In order for the national debt not to deplete the reserves that the central bank promises to accumulate, the Ministry of Finance should do this Refinancing (“roll”) maturities for approximately $14,000 million on the voluntary market. “A very ambitious goal back on the markets for the first year,” explained the analyst.
Caputo, Bausili and the importance of “good calibration”
But him Private sector You should also do your part. To balance the foreign exchange market and cover a current account deficit, companies should increase their net external debt in other countries. $14 billion. This would mean an influx of private capital an average of $1.7 billion per montha record that, according to historical data, was only achieved in the year six months in the last 23 years.
growth or recession
The scheme presented by Bausili contains a paradox: As the economy reactivates and consumption grows, the Import demand and therefore dollars, which puts pressure on the band’s ceiling. Furthermore, the Outbound tourism threatens to continue to exert pressure if the real exchange rate rises or is perceived to be favorable.
The conclusion circulating on the money tables is that if the external financing does not appear in record volumes, the diagram only ends with a recession balancing demand for imports and consumption to avoid pressure on the dollar. “You need to buy 14,000 million to pay government bond maturities and 10,000 million to monetize the economy. It’s a lot“summarized the former central banker interviewed by this medium.
With the market on alert and bonds under pressure, all eyes are now on us Luis Caputo. The minister has scheduled an interview for this Tuesday at 9:30 p.m The Bach House with the journalist Eleonora Cole. The aim seems to be to send a signal of calm before the markets open and to convince investors.
AM/ML
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