The red circle. Milei in the economic labyrinth

• What is a maze? It is a place with many passages who intersect and in which it is very difficult to guide and find the exit. In the economic field, Milei is in a maze. In addition, the scandal for the coimas clouds his sight.

• With the elections around the corner, the “markets” are very nervous. What are you afraid? Lose money, when they are used to lifting it with a shovel. The dynamics of the dollar, interest rates and projections after October bind in that maze. And the country risk remains at such a high level that the government never imagined.

The dollar: Buy champion

• Recently, the Central Bank’s exchange balance was known: in July, the purchase of dollars amounted to USD 6,477 million. And in the accumulated since April, when the agreement was signed with the IMF, they add almost USD 18 billion. Compensated with the sales that people make, the net purchase of dollars reaches USD15 billion. That is, a figure similar to the two disbursements that the fund made since April.

• The important thing about all this is that the purchase accepted in July after the Minister of Economy, Luis Caputo, left “the dollar floats. Therefore, anyone who seems cheap, will grab the weights and buy. Do not miss it, champion.”

• From that moment the official price of the dollar climbed 10%. And with such a strong demand for dollars, with more than 1.3 million people and entrepreneurs buying in July, the price did not rise more because throughout August because the economic team has been applying a monetary squeeze.

• That enormous demand for dollars expresses a huge distrust of investors and savers towards the Argentine peso, so they seek refuge in the foreign currency.

RAISE RAISE: ANCHLA FOR WEIGHTS AND ECONOMY

• In response to exchange pressure and to prevent it from having more inflation, the Central Bank raised interest rates and treasure validated rates of almost 5 % monthly in this week’s debt tenders.

• In addition, the Central Bank rose bank lace above 50 % to stop bank credit and that the weights go to the dollar.

• Banks are offering rates around 4 % in fixed deadlines. That is, almost double that inflation. All this to try to remove attractiveness from the dollar.

• The rate rise has a double edge. On the one hand, it can help contain the price of the dollar and inflation. On the other, the credit is expensive, so there is no doubt that it will have a negative impact on consumption and economic activity. In a context where economic activity already shows signs of deceleration, this measure generates tensions.

• You have to look at card summaries and the rates asked for banks to take a personal loan to realize how consumption will stop.

• For current account advances, the interest rate almost doubled from July 1 to August 28, this complicates entrepreneurs who need money for daily operations.

• The monetary squeeze is a squeeze to consumption and production.

Economic Perspectives: The electoral crossroads

• The closeness of the elections has uncertainty to the economic front. The projections of the “markets” and the owners of the country point to a reset of the economy after October, which probably means devaluation, modification of the exchange scheme and a new blow to the living conditions.

• They want to do well to the government of Milei, but see every day with more distrust than their desire is made. His doubts and the weakness of the corrupt government open an opportunity to think of exits from another class.