What happened in the last few days that produced this change? Mainly there were three events that played in favor of the increase in the exchange rate. In the first instance, the MSCI company, by means of a press statement, announced that Argentina companies will be in two indexes (due to the GDP deduction): in the "MSCI Campaigning Index of Markets" in May and in the "MSCI Frontier Markets Index". In simple words, Argentina will be in both indexes, the "emerging" and "border", which is better because it increases & # 39; The market for its assets. However, there arose suspicions that they did not reconsider the "emerging" qualification. Recall last year it was announced that Argentina would have that status, but the circumstances were complicated last year as a result of the currency crisis. This created huge uncertainty in the markets, affecting the risk of Merval and the country. Of course, any increase in uncertainty affects the demand for dollars.
On the other hand, we must add the bad inflation figure for January, which was higher than expected. The consumer price index developed 2.9% monthly when there were expectations around an increase of 2.6% per month. In terms year after year, inflation is 49.3%. As this is not enough, inflation in February will not encourage where at least one floor of 3% is expected. The fact that the official data was higher than expected also increased uncertainty by generating weight on the dollar. In addition, the recent restrictions on buying Leliq from the financial system, not only suggest a lower supply of foreign currency, but some banks will have to dismantle a part of their jobs and call for dollars to send those funds abroad. Unfortunately, this measure will cost less external funding of domestic demand at a time that it needs to encourage the recovery of the economy.
The third condiment that I considered before the increase in the exchange rate is the Leliq tender, as BCRA was not an auction of everything that matured ($ 190,000 M). The refurbishment was for $ 180,000 M, so the rest of the pesos also has a weight on the dollar. When analyzing these three variables, this increase in the dollar appears to be short-term, but with some "buckets". It's not good that inflation has been higher than expectations. And it is true that although Argentina is considered a "emerging country", investors do not consider it as such. The market remains skeptical that the next government (whatever) will face the structural reforms that the country needs. Therefore, it is important to remember that, although the dollar could have a rotation increase due to these specific events, the truth is that the necessary reforms or, inevitably, must be faced in the future, we in trouble again So there is no hysteria or resting on your laurels. Overall, the Central Bank seems to play down the importance and not go into hysteria, but it did not relax either since the end of the day that it operated with future sales and He continued his rate hike. We must also remember that the Treasury has US $ 8.5 billion to include dollar pressure. Although ideally, this money is convenient for the second semester, when the election race increases the uncertainty that puts pressure on the dollar. It is possible to avoid a new exchange crisis, but if this does not fit with solving the structural problems, only the macroeconomic consequences of not reducing public spending would be delays. The most frightening thing is that the country's risk rises again. The data that Argentina needs to go down to be able to return to finance in international markets and to get out of the horizon to give them the best to pay its public debt.
(*) Organization "Freedom of Progress"