The monetary base is growing, and it is not bad news
Popular wisdom has it that the government has adopted a zero-issuance monetary policy. However, the reality is somewhat different. The monthly monetary report for July, just published by the Central Bank, clearly says that the monetary base grew 10.6% in July against June in real terms and seasonally adjusted. While this is not news to […]
Seeking Balance
Argentina needs to stabilize. Javier Milei and the economic team made an extraordinary contribution given the inheritance received and some of the results we have seen in these first almost 8 months. Although we do not believe in the 17,000% mentioned by the President, we do believe that there was a risk of hyperinflation when […]
Lifting FX Controls on Good or on Bad Terms
There is a consensus that FX must be lifted, but disagreement remains about how and when to do so. Maintaining the controls has costs, because there are investments that will not take place until they know whether they will be able to withdraw dollars and pay dividends. While FX controls remain in place, there is […]
The Art of Plumbing and Monetary Issuance
The government is focused on turning off the money-issuance faucets. As for that one corresponding to the government financing, there is not any opposition, quite the opposite. The IMF and the entire community of economists and businessmen celebrate that the government has a surplus and that the faucet is not only closed but practically prohibited.
Correct and incorrect assumptions on dollars and pesos
1st assumption. The exchange rate couldn’t depreciate because the Central Bank had dried up pesos from the market (with the Bopreals and by not lending to the Treasury). The truth is that if they had really dried up the market, the price of pesos (the interest rate) would have gone through the roof. But the […]
A New Start for Deregulation and Micro Reforms
Everyone is waiting for the government to give some signal regarding the removal of FX restrictions. Without a doubt, that is the macroeconomic question of the hour. The uncertainty of the market hides the fact that President Javier Milei finally decided to appoint Federico Sturzenegger as Minister of Deregulation and Transformation of the State. This […]
The Limits of FX Controls Are Becoming Evident
On the surface, last week ended very well for Milei’s government. After six tough months, Congress approved “Ley Bases” reform bill and the fiscal package, including the most contentious issues such as the special investment regime, the increase in income tax, the increase in the minimum rate for personal asset taxes and the moratorium and […]
External Shocks and the FX Spread Compromise International Reserves
The fifth consecutive fiscal surplus and inflation below 5% are important points in favor of the government. In addition, the activity starts a recovery path. What is still under discussion is whether the exchange rate is appreciated. It is a question that has a thousand possible answers many of them with consistent justifications.
After a Good Week for the Government, on to a New Phase
The week ended on a positive note. Inflation was the lowest in 24 months and beyond the rise in utilities, the core CPI at 3.7% was a goal from the middle of the field. The OK from the IMF board was a given, but it is always good to confirm it. And the approval of […]
Overreaction?
In the last two weeks, the financial market has faced one setback after another. The Blue Chip Swap dollar jumped from under 1,100 pesos to over 1,300. The other dollars (MEP and parallel) followed a similar trajectory. We do not see this as concerning. Perhaps more worrying is the fact that sovereign debt prices fell […]