The dollar, with a new flotation scheme and a volatile seller

By , in Finance on .

He inaugurated the new stage selling US $ 10 million and continued to put on the table another US $ 123 million. This led to the change in the flotation system carried out by the Central Bank.

The rise of the dollar of 18% in the last 90 days seemed to find some ceiling in the week, when the currency touched $ 20.29 in the wholesale market and the Central went out to sell to quiet the waters in a market that is looking for limits and front which the Government prefers not to provide great details.

But the market lives looking for certainties and there is one that appears widespread these days: it is convinced that the Central lost the power in the hands of the Casa Rosada to raise the interest rate in case inflation or the dollar continue to climb.

The conviction is based on the fact that on December 28, when the inflation target was raised from 10 to 15%, the official bet was to lower the rates to favor economic activity. And at that moment two visions were opened about the evolution that some key variables are having.

The official is summarized in a 20-page report that circulates around the business world and highlights positive economic data such as the recovery of meat production, the increase in patenting of cars and motorcycles and the recovery of industrial exports.

The work highlights the drop in tax pressure and that this year investment “leads growth” with a rise of 13%. And the strong jump of the square meters acquired with mortgage loans last year is not absent.

That report could be titled as: the government does not understand why the economy does not fall in love with public opinion despite the good indicators of some sectors.

Since already the report leaves aside the impact in the pockets of the increase of the rates and the one of the devaluation of the weight on the prices. Also, the possibility that the inflation of the first quarter will reach 8% and will devour more than half of the annual inflation target.

This inflationary result deepens the seasonal phenomenon of consumption in the first part of the year, characterized by “new prices with old wages”, which in 2018 has the spice of dollar volatility.

In terms of exchange, the February / March bimester has a seasonality defined because the dollars of agricultural exports do not yet enter and, in this case, by a demand that seems to respond with purchases to the uncertainty that the new scheme that is coordinated on Tuesday arouses in a meeting between the Casa Rosada and the Central Bank but which, in the practice of the last few weeks, does not allow us to see a clear rule.

Seasonally the corn export dollars begin to enter after March 20 and those of soybeans begin in early April, but this year the outlook was darkened by the drought and because there are forecasts that the corn crop would be 15% lower and soybean 23% lower than last year.

Foreseeing that less foreign currency could enter, even though the rise in prices would compensate part of the losses, prudence seized the grain sellers and even more so when they are seeing a dollar that is climbing prices in the domestic market.

The version of the operators is that the government is most interested in avoiding steep increases but is comfortable with the increase in recent months that began to increase imports and purchases for hoarding and travel abroad.

In addition, they believe that the Central Bank only intervenes from the decisions made in the Casa Rosada and that Federico Sturzenegger remains uncomfortable with the role he has to play and tries to intervene as little as possible and, therefore, to favor uncertainty .

The Government, the Central and the market have an important background certainty: Sturzenegger has US $ 62,000 million in reserves to intervene and control the price of the dollar without any problems, even beyond the arrival of the dollars of the agricultural campaign or those that Minister Luis Caputo can get back to the markets and placing bonds. But the problem is the meanwhile with a scheme of uncertain interventions.

The transfer of the rise of the dollar to inflation is again in a test bank and everything indicates that the road will be uncertain but the final result is already known: the devaluation of the peso of 15.2% in 90 days changes the horizon of a year in which the Government decided to modify the alignment of key variables in the economy: tariffs, salaries and the exchange rate.