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Domingo Cavallo: "A new exchange crisis would be passed on to the whole government"



Former Minister of Economic Affairs Domingo Cavallo warned a new exchange crisis "would be put on the whole government", t and he argued that the "pure flotation" that the central bank was following was a source of vulnerability. The economist pointed out that "almost dogmatic resistance to pure flotation approved by the IMF is a source of vulnerability in the event of a possible change in crisis, even greater than fiscal weakness."

"I am convinced that, despite the constant appeal they follow, they will come to the point when special circumstances arise ”., said Cavallo in his new commentary on the blog. In this text – the week published in the second round – a former official thought that the Governor of the Central Bank, Guido Sandler, "shows that he prefers to intervene very little in line with the quantitative limits imposed by the IMF, so that in reality all these possible artefacts of exchange lanes are nothing but pure flotation systems. masking.

"At the moment, this very limited intervention justifying the fact that if they do not limit it, the monetary base will expand too much and they would not fulfill the goal of keeping it unchanged, it is a very bad sign for the future," he warned. He added: "This means that if the exchange rate at any time for any reason would exceed the ceiling of the non-intervention zone, the sale of the central bank's currencies would be quantified as it seems to be binding on the IMF". .

In the case of Cavallo, in such a case, Sandler "happened with (Federico) Sturzenegger, who, by intervening in the small puchitos and without any sort of change as a goal, was finally unable to stop the exchange rate. The only effect would be Sandler's retreat? I am afraid it will be passed on to the whole government. " On the other hand, the former minister said that the government "is thinking of Argentina as a single monetary economy, where the exchange rate is important only for international trade and international payments, but it does not matter in determining the rate. Inflation".

"It is thought that people choose money and goods without the ability of people to choose between local money and dollars, or between dollars and commodities," he said. According to your likes "This is a clear mistake in assessing reality which makes our economy very vulnerable to currency exchange. Probably even more than Sturzenegger's. "


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