The Minister of Economy, Luis Caputo, celebrated on social media the agreement with the banks to cancel a part of the puts (instrument that allows financial institutions to sell the national Treasury debt securities to the Central Bank in the event of a loss of their value).
The head of the Treasury posted on his social media account X, “the pesos issued are for purchases in the MULC (Single and Free Exchange Market, as the official wholesale market is called). The objective was always to dry up the market of pesos. I have said this since the first interview, but well, some are still not convinced. Reality will prove that soon people will have to sell dollars to pay taxes and the peso will be the strong currency!” It is striking that the Government speaks of the peso as a strong currency when the president during the electoral campaign repudiated the Argentine currency.
Besides, The minister omits that the sharp decline in the purchasing power of wages and pensions is leading to dissaving by another route. There are those who cannot make ends meet and had some money saved and had to burn through their savings to try to maintain their level of consumption. Caputo also cannot explain the fall in economic activity in sectors such as industry and construction, which caused an increase in unemployment.
Amid devaluation pressures, the minister recommended not buying foreign currency. “Those who are buying dollars today thinking it could be a good investment, I am warning you that it will not happen. Since taxes are paid in pesos, if you have savings in pesos today and you dollarize them, later you will have to sell them again to pay said taxes,” he added this Friday on the social network X. It is a reversal of the famous phrase of the former minister Lorenzo Sigaut “he who bets on the dollar loses.” The phrase became well-known, and shortly after his statement, the value of the dollar skyrocketed, further aggravating the economic crisis. Will the “markets” twist Caputo’s arm? Wait and see.
While the Minister of Economy makes these statements on social media, the Central Bank continues to lose reserves. In the last three days, the Government has reportedly allocated around US$120 million to intervene on the dollar settled with liquidation (CCL) in an attempt to contain the rise in the price.
Last weekend, the government announced that the BCRA will lose part of the dollars it buys with pesos from exporters by selling dollars in the “cash settlement” market. Not only that. It is estimated that it will sell around US$2 billion of reserves that it bought since last May. The Minister of Economy already used the same mechanism in 2018, burned around US$14 billion and was ejected at the request of the IMF.
The government is raffling off the reserves, Caputo has already given away even the Central Bank’s gold, and a devaluation cannot be ruled out, which generates extraordinary benefits for a few and means a transfer of income from the working people to big capital. The defense of wages is of the utmost importance.
Source: www.laizquierdadiario.com
