Will the dollar jump again ?: This anticipates Miguel Boggiano

The Economist Miguel Boggiano He anticipated that as of September, when the grain liquidation and quarantine are finished, the government will not be able to avoid devaluing the dollar.

He believed that the currency will be between $ 150 and $ 200 at the end of the year hand in hand with heterodox policies that he expects from President Alberto Fernández. And he warned that with a policy based on the super stocks blocking the entire economy “they will not be able to reach the end of the mandate.”

The following is a summary of the dialogue with iProfessional:

– the Government is going to devalue?

-It will try to delay the devaluationias much as possible but you can’t avoid it. It is very difficult for me to kick it past September, when the grain clearance is over. In addition, when the quarantine is lifted, you will see the problems caused by the exchange gap in the normal operation of the economy.

-How much can the parallel dollar reach at the end of the year?

-What number can happen. It will depend on how the monetary issue continues and what happens with the Leliq, on whether they decide to make a plan to reactivate the economy that implies a drop in the Leliq rates, any economic policy decision can be very heterodox. It is very difficult today to get dollars, because they closed the MEP and the cash with liquidation. You could risk a dollar between $ 150 and $ 200 at the end of the year.

– Will there be an agreement with the bondholders?

-This is like a soap opera for adults. The Government says that it has the will to agree but does not seem so convinced. It should do so because not reaching an agreement with the bondholders will imply more pressure on the dollar, the only source of financing will be the pesos issued by the Central Bank. It seems to me that the government tightens the negotiation cord too much, but on the other hand it is difficult to say, because it does not have a plan that can expose either.

-What would be the consequences of a total default for the real economy?

-A default has very negative consequences. What it produces is a change in expectations, since there is still a gap to believe that financing will be obtained through the market, and not only with issuance. My feeling is that the market gives 80% chance that there will be no agreement with the bondholders and 20% that default will be avoided. AND How much can the government crawl with a super stocks and thus blocking the entire economy? Two months. But Unable to reach end of term in this situation. However, the government has shown that it is good to surprise with solutions that nobody expects.

-How do you see the depth of the pandemic crisis?

-We are suffering devastating economic consequences, but not because of the coronavirus, but because of how this health crisis was managed. The cure was worse than the disease, because it was not a cure. After April’s 26% drop data they still don’t realize the disaster, it’s time for politicians to acknowledge that they made mistakes. Now they say that the peak of the pandemic will be in August, they have no idea why it was not tested, we are blind. Quarantine should be relaxed even if those infected are increased.

The government has been trying to alleviate these consequences of the pandemic with public funds in a context of falling revenues, what consequences are you anticipating?

Inflationary. It is future inflation. They can postpone it by tucking it under the rug, but it will translate into more currency gap and higher prices. This is the same thing that happened (to former President Mauricio) Macri, first with the Lebacs and then also with Leliq, but in monstrous magnitudes due to the amount of pesos they had to print in this situation, which of course is unthinkable.

-What do you think of the Central Bank’s monetary policies?

-The Central Bank is having the highest issuance speed since the 1980s and although today it is encapsulated in the Leliq, that does not mean that the problem disappears, it is only postponed. It is not clear how it will be solved.

-Can restrictions to avoid the flight of dollars can be effective?

-These restrictions have unintended consequences that we are not seeing due to quarantine. You cannot prohibit buying dollars, because then people are going to try to buy a household appliance, or any other product with imported supplies, and they are going to tell you not to sell it to you. The blue dollar market is very small, companies need blank dollars.

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