Market optimism in spite of the challenges for the transition
As the Kirchner administration enters into its final year, the economic team appears to have made several strategic decisions that will have key effects on economic developments. These decisions should be seen as part of a broad political agenda in which the Governments main objective is to preserve its image of a progressive administration in […]
The truth behind the exchange rate
The year ends on a strange note: while the EM world is in turmoil and the currencies are depreciating everywhere, Argentina has managed to stabilize the parallel exchange rate and insists in keeping the official exchange rate quasi-fixed in an effort to control inflation. The question at this stage is whether this stability is for […]
Will there be enough reserves in 2015?
International reserves are now at center stage once more. Creative accounting, short-term borrowing and the postponement of the payment of imports have helped to increase the headline figure to around USD 29 billion. Just without these gimmicks they would only be USD 22 billion. The market players, for reasons that are not totally clear, feel […]
The debt and exchange rate traps: is there a way out?
The changes at the Central Bank are taking place at a critical time: international reserves are once again dropping with a gloomy outlook for the fourth quarter and are likely to end the year at around 25 billion dollars, the currency is getting deeper in overvaluation territory and there is no clue about how the […]
A month after default: bond prices up, the economy down
The economy is all of a sudden back in the middle of a storm. There are pressures on the exchange rate that is now overvalued, the spread on the parallel exchange rate has increased to 70%, while international reserves are falling again. Government officials are going around the world (to China, Europe and the US) […]
Toying with default: How long can it last?
In the end there was a default, though not a standard one. Argentina is solvent and it has shown ability and willingness to pay. The Government is even arguing that the country is not in default, as it transferred the funds to service the Discounts bonds to the account that the Bank of New York […]
The final countdown: How to avoid the default
The Supreme Court decided not to take Argentinas case on Monday June 16th, a decision that took the market by surprise and the Government without a contingent plan. This decision left Argentina without any further legal options and it now has to choose between two costly alternatives: either it reaches some type of agreement with […]
Kick off in Brazil and in the Supreme Court: Vamos Argentina!
Recent economic developments: recession, exchange rate and debt The short term outlook is generating more questions than answers, as the economic performance is dominated by high inflation, a recession which is relative deep in many sectors, pressures on international reserves that are now temporarily rising though not at a strong enough pace to dispel concerns […]
An ugly recession on the way
The good news is that Argentina is experiencing an improvement in financial indicators, but unfortunately this time it is accompanied by deterioration in economic activity. The incipient financial stability that was achieved in March was consolidated in April, as the spread between the parallel and the official exchange rates dropped to around 30%, interest rates […]
The recent changes in economic policies: whatever it takes to survive
Will the Government do whatever it takes to increase reserves, avoid an external crisis and reach the end of its mandate in one piece? Based on the recent evidence, the answer is unambiguously yes. It is now resorting to policies that were demonized during the last ten years, such as large increases in interest rates, […]