- A debate that never existed
- Strategy: Money demand and exchange depth
he Economy Minister Luis “Toto” CaputoToday, Wednesday, it opened the “2025 Leaders Meeting” that it is organizing Historian and opening, The event will be concluded by President Javier Miley.
In his presentation, the official emphasized that “today’s economic support is in addition to social support, which is a very strong confirmation and generates greater governance capacity,” the minister said at the event that brings together the highest political forces and the national business community.
In addition, he expressed doubts about the government’s strategy to strengthen central bank reserves (BCRA) and denied accounts of the alleged failure in negotiations with international banks.
In a long speech, The official explained that Argentina could purchase between 7,000 and 21,000 million US dollars over the next year. Depending on the recovery in demand for money.
A debate that never existed
Caputo reached the crossroads of criticism about the impossibility of accumulating reserves. He added, “The Fund wants us to buy reserves, and the market wants us to buy reserves, and we want to buy reserves. And They come to tell us that we are the economic team that has bought the largest number of reserves in history, by far“He said in a defiant tone.
The minister explained the difference between purchasing reserves and accumulating them. He admitted that the real challenge is their accumulation due to the legacy of heavy debts. “We inherited a huge debt situation. With everything: with the market, with importers, with multilateral companies.” He pointed out and stressed that the government did nothing for 20 months except fulfill these obligations.
But Caputo stressed that the scenario changed radically after the elections. “We are at the moment where we are really close to market access,” he said, adding that this not only facilitates accumulation but also “removes investor anxiety.” timing To buy those reserves.”
Strategy: Money demand and exchange depth
As he described it, the official plan is based on Two basic pillars. The first consists of Buy dollars as demand for the peso increases, and avoid repeating past mistakes. “The intention is to buy dollars because people are asking for more pesos,” he explained, warning of the risk of returning to LEBAC and Leliqs.
The minister used a compelling example: If OpenAI founder Sam Altman sold his $25 billion to the central bank tomorrow, the institution would be forced to issue $35 billion pesos, which the people would not ask for, which would generate inflation and force the government to sterilize these pesos through profitable commitments.
“If we follow what we sent to the budget, the base in nominal terms will grow by 25%. This will allow us to purchase approximately $7,000 million. Return: without the need for sterilization.
According to his calculations, If the monetary base grows by 25% in nominal terms – as the budget expects -, The central bank can purchase approximately 7 billion US dollars without the need for sterilization. But if demand for money rebounds, the numbers will rise dramatically: “We could buy 7,000, 10,000, 14,000 million dollars.” If demand increases by two percentage points for the product, the purchase will reach “20 thousand or 21 thousand dollars.”
The second pillar is the depth of the exchange market. Caputo warned that daily trading volume dropped from $600 million to $200 million, with days of just $90 million. “I can’t expect to buy $100 million a day in a market that’s running $200,” he said.Because that would lead to an artificially high exchange rate.
With an upbeat note, Caputo concluded: “This train has already started. I sincerely invite you all to continue, “Because it is a train that is moving on the right track and we are about to face the best economic cycle, at least since I was born.”
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