the beginning of the year was with the ironing dollar, in many cases below the floor price of non-intervention established by the Central (i.e. using less of it should be officially). In parallel, the interest rate was not lower 52% annual and the productive sector do not seem to support much more. Inflation remains concerned and out of 2% monthly seems unattainable with official increases in rates. In Filo.News we analyze the evolution and perspectives of the dollar, interest rates and inflation to mark the economic tensions in an election year. Holiday dollar the current Exchange schema consists of a band of no broad intervention, which began with the management Sandleris, marking a “floor” of $34 and a “ceiling” of $44. Out of these values the Central intervenes by buying or selling dollars to stop the currency within the “gang”. In turn, these limits are updated, ensuring a progressive devaluation, which was 3% monthly in 2018 and today is 2%. Thus, the area of intervention is not now located between $37,97 and $49,13.
While the concerns revolved environment that the dollar will test exceed the maximum values, from October the trend leads to floor of non-intervention. In particular, since beginning of year the currency stood even for below what the Central had defined. Therefore, the Agency came to buy their daily limit: $ 50 million. However, these amounts did not leave it in their expected values.
Before the inefficiency in the monetary scheme, it was reported that since this month purchase limit increase by 50%. Thus, the amount of bids per day to keep the price of the dollar within the zone of intervention was not the US $50 million to $75 million.
In this sense, the continuity of monetary policy, which prefer to keep interest rates high in order to contain the dollar within their minimum values is marked. The suspension of the rise in Federal Reserve interest rate helps to keep the dollar and gives respite to emerging economies around the world.
Took immediate effect in Argentina the announcement from the FED maintain its rate and go slower with the disarmament of its stimulus policy: – fallen
country risk–fell insurance against a default
– is just pic.twitter.com/WOlIHS0zvK dollar bonds – Ignacio Olivera Doll (@ioliveradoll) January 30, 2019 cautious interest rate market is demanding almost a month ago that the BCRA to accelerate the pace to buy foreign currency, to raise the exchange rate and lower the rate of inte Res. The BCRA is cautious, contrary to the market. Read the full report: https://t.co/DVwSSCXVB4 pic.twitter.com/mqxpefzFEK – Analytica consultancy (@AnalyticaARG) 29 January 2019 keep the price of the dollar is a very concrete cost in the real economy: the interest rate. Daily the Central auction Leliqs (liquidity), lyrics for banks short-term financial tools, whose interest came to exceed 73% in their first month of life. While they have had a tendency to the low average for January was 53.7%, which is still very high and the productive sector feels the consequences of a policy that was not expected to last much.
Designed as a short-term tool to absorb the weight of the economy, the actions of the Central Bank corresponds to the “caution”. In an election year “there is no margin for error” and after 2018, another Exchange run can finish the plan. Therefore, at the expense of further contracting economic activity the interest rate stays above 50% and inflation, even though I managed to slow down from the peaks in October, already in February seems to increase. Always present inflation in the statement where the Central increase the daily limit of intervention to buy dollars again to ensure that its “main objective” is to reduce inflation which “continues to be very high”. He considered that “a strict control of monetary aggregates will lead to that goal,” being decisions for February consistent with it. However there seems to be a difficult to drill 2.5% monthly floor and although the trend, since the peak in October, shows a slowdown private consultants estimate an increase in price index consumer (CPI) in February ending in 3%.
The problem is already observed since last year, “update” in public services prices inflation story and generate an increase that becomes almost inertia in the evolution of prices and the loss of purchasing power, being basic services as light, electricity, gas and public transport.
In November wages again losing to inflation and in the last 12 months accumulated a loss of 13.9%. (INDEC) – Ismael Bermudez (@IsmaelBermudez1) January 31, 2019, to the impossibility of credit for the production sector developed in the previous point is added the lower purchasing power of the population, which goes more and more pa ten of their salary rates. There are no sales and no credit how do SMEs saved? how is maintained employment? how will do the economy to grow again? They are a great part of the concerns that we would have to have either an odd or even year. In this article:
