In the middle it is clear that much happened. The exchange rate dropped more than 100%, and. T. BCRA sold foreign currency to the private sector – strictly $ 16,000 million between March and September. Also, the exchange rate storm attributable to internal errors and external scenarios has eliminated commitments to BCRA (Lebac and now Leliq) at around $ 70,000 million to $ 20,000 million.
But we can say that Did silence come after the storm? From our vision, yes. This is the system in which we understand it BCRA currency purchases "only"and represents the largest private dollar offer. This is not the same surprise. Especially it is the result of the fiscal balance policy together with the monetary scheme defined since October reducing the current account deficit.
Why? This was reflected in the current account deficit, which in 2018 exceeded 5% of GDP Argentina used dollars to finance domestic surpluses. Hence, its reduction simply meant a reduction in public and private spending or a shift from public sector savings (zero fiscal deficits) to private (due to the increase in pesos and lower dollar costs).
This path has been synthesized by a treaty signed with the IMF, which will give us the national dollars, "which are in line with Argentina's fiscal goals", as well as BCRA, who decided not to give anything / little.
In fiscal terms, the government had set 2018 as the primary deficit target and in 2019 between tax increases (new tariffs, financial income and adjustments to taxable minimum amounts below inflation), expenditure control (public wages) below inflation) and investment to “clear” to 0%.
This means that "the availability of IMF dollars to pay financial liabilities could be a great opportunity".
In terms of private savings, the rapid devaluation meant a "moderation" of low private income dollars, which allowed to check lower costs for tradable goods, which in the short term is reflected in a sharp drop (decrease) in imports. car and travel and tourism is a clear example). These consequences were the first manifestations of the correction of the current account deficit, which was evident in recent months with the emergence of trade surpluses.
We understand that this dynamics will be highlighted forward, where the biggest crop of the new agricultural season will begin added Exports of gas from Vaca Muerta, meat and demand from Brazil converted into industrial exports and regional economies because of the devaluation of the peso 50% of the real. Simple, more private dollar offer.
Now another stage of private saving is also manifested in the broader possession of pesos; on the other hand a sharp fall in the private dollar rate. Between 2016 and 2017, the monthly average was $ 900 million, which more than doubled during the "foreign exchange storm", averaging $ 1,955 million, down to only $ 500 million. in the last quarter of the year. Another surprise or effect?
In the same analysis, BCRA policy comes from October. We have no doubt that the silence was accentuated by the "simile Bundesbank" which transformed the BCRA, which in monetary terms led to lack of weights (the monetary base is very low in real terms) raising nominal interest rates for sidereal and very strong.
Stopping the expansion of money is consistently trying to reduce inflation by 20/25 percentage points (from 48% in 2018) as the main target in 2019 and gradually to cut rates.
There's a "recent" (and also our initials) currency purchases in BCRA. What do these purchases reflect? Simply that the economy wants more pesos, either for applications with a passive interest rate (in positive real terms, for the first time in more than 10 years) or for more activity (an effect that is not yet dominant). Then they appear inside not only offer export dollars, but also those that are stored in pockets.
Will this situation lead to a balance? From our position, yes. As long as it keeps a tight tax adjustment (the same government has no choice), it is merged with the Bundesbank criollo and has a clear anti-inflation target. That way, the positive real rates were left as well as the higher dollar offer – at least in 2019.
(*) Master of Personal Portfolio Investment (PPI)