What does Javier Milei’s government expect?

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The market expects the exchange rate adjustment on Monday.
  • The December contract was trading at $755 per dollar on Thursday.
  • The January term closed at $875.
  • In February, the dollar future was quoted at $959.70.
  • For March, the market agreed to a value of $1038 for the currency.

These values ​​are a far cry from those seen when the Libertarian victory in the runoff was announced when the January contract exceeded $900. However, they realized the expected devaluation through the market, which, at the same time, triggered a quick lifting of stocks.

As for the blue dollar, the informal exchange rate rose by $35 in the week before the inauguration, and during the holiday, the Bitso crypto dollar taken as a reference was sold above $1,000.

As such, it goes along with the trend shown by the alternative dollar on Thursday, with the blue at $990 after touching $1,000. The MEP dollar and the currency dollar also rose, ending at $986 and $991, respectively.

The Market Expects The Exchange Rate Adjustment On Monday.

The market expects the exchange rate adjustment on Monday.

There are strong indications that Milei will aim for a rapid change in various variables, including the price of the dollar, so another devaluation will occur.

“On Monday, the attention of investors will be focused on reading that left the inaugural speech and the first economic measures that could have been announced, with a focus on the fiscal balance and the surplus of pesos, although the regime of the exchange rate will begin in the new period that is expected to have fewer restrictions,” estimated economist Gustavo Ber.

He considered it “important for the new administration to easily inspire confidence because it is necessary to achieve parliamentary and social support that allows the development of an implementation without hesitation. There are associated costs in the short term, among them the acceleration of inflation combined with the reduction of economic activity.”

Javier Miles’s first day: what happens in stocks, bonds, and country risk

On Friday, Argentine bonds in dollars listed on Wall Street showed an increase of between 0.5 and 1.5%. AL30, the market’s most popular title, rose 0.4%, while AL35 rose 1.5%.

So far this year, these bonds have risen to 54 and 30%, respectively. The AL30 retails for US$37.15. Most of the increase has occurred in recent weeks, accompanying the imminent change of government, which looks forward to a new economic model.

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It also helped to recover the titles chosen by the president, Javier Milei, who publicly said that Argentina would pay its debts, moving away from the ghost of a restructuring of liabilities.

For their part, the ADR, the Argentine stocks listed on Wall Street, was mixed, with a rise of up to 3% for YPF and a fall of 3.6% for Cresud. Considering this and the behavior of the market in recent days, this is a positive reaction.

Inflation

After 8.3% marking the Consumer Price Index (CPI) in October, the private sector discounted that inflation will return to double digits starting in December, which means that the cost of living will be higher in the coming months.

For private companies, the CPI last month, which will be known on the 13th of this month, is between 11% and 13%. So, C&T Economic Advisors reported an inflation rate of 11.5% in November. Meanwhile, the Freedom and Development Foundation (L&P) recorded an inflation rate of 12.6%, while Ecolatina reported 12.7%. For the Study Center Orlando Ferreres, which gained 12.9%, EcoGo bet it will be 13.4% and balance approximately 11.2%.

In this way, the consultants predict that the year will end with inflation, which will move to a range between 182% and 211%. However, there is a possibility that this number could increase up to 240% if there is a significant reduction, as is expected to happen. That, as said, has an almost immediate transfer of prices.

From Equilibra, they found that inflation during the leadership of Alberto Fernandez accumulated 916%, which gives a monthly average of almost 5%, over the second term of Cristina Fernández de Kirchner (2.2% per month) and the administration of Mauricio Macri.

The expectation is that inflation may rise to a floor of 20% in December (if they devalue the official dollar).

Price: how the adjustment of rates, prepaid, transportation and services

The main delay relative to the prices of the economy during the government of Alberto Fernández is one of the goals that the economic group of Javier Milei thinks about. There you can find prices for gasoline, electricity and gas, prepaid, transportation, and more. Private calculations warn that correcting these imbalances means, for the first time, doubling inflation in the short term.

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A recent work by Equilibra details that to equalize the regulated prices to the general level, gasoline must increase by 45.5%, energy rates by 146.8%, public transportation by 83.3%, and prepaid rates by 39.2%. In that cocktail, inflation will rise by almost 7 points, according to Equilibra’s estimate.

“It is interesting to note from the fiscal point of view that only rising energy rates and public transportation help lower public spending by reducing the need for subsidies. The increase in prepaid prices will reduce the critical condition of the sector’s profitability at the expense of higher costs for families that contract these services. Finally, in this exercise, we will only get the direct effect of the increase in fuel CPI and not the indirect effect produced by fuel, which is more expensive in logistics costs that affect the production of goods and services in the economy and public transportation,” they clarified.

“Products of high inflationary inertia, The shock will raise the monthly inflation rate several notches, and because it will remain high, the annual CPI will rise higher than the estimated initial effect to correct the delay. After the adjustment of relative prices, a stabilization plan is needed,” Equilibra concluded.

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The Rates Are More Than 100% Of The Latter, According To A Private Report.

The rates are more than 100% of the latter, according to a private report.

A report on Roman Group Based on data from Indec, it is estimated that “repressed inflation” accumulated from December 2019 to October 2023, the latest data available, at 33%.

The consulting firm detailed that among the main CPI items, those with the longest lag in real terms, that is, the decline in overall inflation over the past nearly four years, are: housing, water, electricity, gas, and other fuels (38%), communications (37%), various goods and services (19%), education (18%), transportation (10%), health (8%), and alcoholic beverages and tobacco (6 percent).

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The chapters with the greatest real growth over time are: clothes and shoes (36%), restaurants and hotels (25%), food and drink (10%), entertainment and culture (5%), and home equipment and maintenance (4%).

Bye Pre-Trip, VAT refund, Fair Price, and “Today 12”

Pre-trip

Pre-trip is a tourist pre-sale program that pays 50% of the cost of credit travel expenses. In addition, it includes a special scheme for PAMI partners; through this, the return is 70%. In their five editions, the programs benefited 7.5 million people, with an economic impact of $792 billion for the tourism sector.

Throughout the campaign that established him as the winner of the electoral contest, the libertarian leader made it clear that one of his main goals, to balance the country’s economy, was to reduce the deficit by cutting state spending Your definition of clipping can also refer to removing the pre-trip program. This proposal crystallizes the symbol of the chainsaw that he took in the many caravans he made throughout the country. The last edition of this program ended in October, and it is likely that it won’t be an issue again.

VAT refund

In December, AFIP continued the Buy without VAT refund program in effect, enabling a 21% refund on debit card purchases. Due to the inauguration of Javier Milei as president of Argentina, there are concerns about how long the benefits will last. Holders of IFE or Anses assignments, retirees, workers, employees, and taxpayers can access savings of $18,800 on Christmas and New Year purchases.

The VAT-free purchase is valid until December 31. Therefore, workers, monotributistas, AUH holders, pensioners, and IFE can access refunds of $18,800 as a monthly limit until the end of the year.

Fair Price and “Today 12”

The Now 12 consumer financing program will end with the new government. Members of Luis Caputo’s economic team revealed that the two programs will no longer continue. Currently, the expiration date is up to January 31, and what has been resolved is to continue with the plans of 3, 6, 18, and 24 installments for the holidays.