Hours after Javier Milei sworn in as president of Argentina, consensus among market analysts is that he exchange rate will continue applying at least for a good part of 2024.
“There will be one more year of restrictionsalthough it is very likely that they will moderate as the drastic adjustment measures that Milei proposes to apply bear fruit,” stated a confidential report that circulated early among usually well-informed bankers, according to the agency. Argentine News.
Some of those”wolves of the city of Buenos Aires“, who met with the Minister of Economy, Luis Caputoin recent days, coincide with the diagnosis circulated by an investment bank about the impossibility of quickly exiting exchange restrictions.
The numbers Milei used to describe “the worst economic inheritance”
In favor of this analysis, they note that the radical proposals of the new president were moderated as the possibility of accessing Rivadavia’s chair approached.
Milei already admitted that his proposal dollarization of the economy will remain for a second stage of reforms. “First we must solve the problem of the Leliqs,” he explains.
For consulting economists Outlierhe change control will continue “for quite some time.”
However, they agree that a simplification of the multiple existing exchange rates.
“Exchange split? Probably,” the analysts respond. They allude to the fact that a higher tax for the dollar that importers face. Of what magnitude. It could be known between Monday and Tuesday. Initially, Luis Caputo was going to give a conference this Monday morning, but everything seems to indicate that these announcements would be made on Tuesday or even Wednesday.
An analysis of Ecolatina places the possibility of an exit from the exchange rate at “some time in 2024”.
What are the economic announcements that Javier Milei made during his speech
The greater or lesser proximity of that possibility will depend on what result the almost draconian cut which is proposed to be applied on the public spending.
“The faster the elimination of the fiscal deficit, the more possibilities of mitigating the restrictions,” reason the experts consulted by the agency. Argentine News.
According to this logic, the complete disarmament of the exchange rate would no longer be a priority for the new government.
Before the stocks, solve the Leliqs
Milei himself has already explained that before moving forward with any elimination of exchange restrictions, he must find a return to the remunerated liabilities of the Central Bank, the “Leliqs”which became part of everyday language thanks to the communication skills displayed by the team of serial posters that surround the libertarian president.
These are billions and billions of pesos that the BCRA of the Government of Alberto Fernández and Sergio Massa was placing to try to avoid a total collapse in the forced financing scheme of the fiscal deficit imposed by the policies applied during the last four years.
However, not all experts agree with the “mileinomics” That the “Leliqs ball and Passes“require a shock solution.
For the consultant Balancesince Leliqs and passes end up being the opposite side of private term deposits, the important question that must be asked is at what speed the transformations should be made, and they agree that this will depend on the magnitude of the cuts in spending and their implementation.
Reserves in the Central Bank
The negative reserves of about $14 billion They are also the reason why it is observed every time the possibility of a rapid lifting of the stocks is further removed.
For analysts, Milei’s government will be forced to create the conditions for the accumulation of reservesapplying a devaluation that has been announced for weeks and could be unveiled this Monday.
“First simplification of exchange rates. Only then to think about an exchange rate normalization with a floating exchange rate”, is the formula for exiting the stocks on which analysts are beginning to agree.
In the next few hours it will begin to be revealed what the strategy chosen by Milei and his “finance wizard”, Luis “Toto” Caputo.