Blue dollar: they warn about the rapid transfer of the value of the parallel to the price of food

this friday was another intense day for free dollars. The monetary issue, the multiple restrictions on the foreign exchange market, the little reaction of the Front of All to the situation and inflation that is estimated at a base floor of 80% by the end of the year, keep the foreign exchange market submerged in strong uncertainty about the economic future.

The response to that situation, which began on July 2, day in which Martín Guzmán left the Palacio de Hacienda, was that the parallel exchange rates soared and reachedalmost every day, new all-time nominal highs.

After the new escalation would change, Different sectors warn that the strong rise in blue is moving quickly to the price of food. Silvia Sarahcoordinator of Barrios de Pie, affirmed that “the increase in food prices has accelerated” and remarked that the rises “aggravate the possibility of bringing a plate of food to the table”. The words of the social leader emerge from an interview with AM750.

The expert’s opinion

Gustavo Lazarian economist and SME businessman, explained to PERFIL that: “We are in an almost hyperinflationary process. We are starting the processit may still be reversible, but it is already started. Not only are food prices going up, absolutely all prices are going up. rise in different proportions, and not in pattern to the blue dollar or the other dollar types. rise relative to the brutal devaluation of purchasing power of the local currency.

The blue dollar continues its climb and “clear signals from the Government” are expected

“The blue dollar is a reflection, food prices is another reflection, the price of plastics and cardboard boxes are another reflectionnamely, all the prices in the economy are going out of control. Today the economy is: the one with prices adjusts once a week, and the rest of the economy has no prices. The lack of prices is also causing a spike in the values ​​of a lot of merchandise, because critical supplies are not available after the madness of having closed imports on June 28, 2022”.

Diana Mondinoeconomist and director at the CEMA University, gave her opinion in dialogue with PROFILE: “The exchange situation It is the result of the policy that the Government advanced to hinder exports and at the same time have a very generous price for imports. what has taken to a crisis in the reserves of the Central Bank. The dollar has an impact on multiple costs, starting with energy, which, as it is more expensive, is transferred directly to prices or indirectly through inflation as a result of the greater issuance which is necessary to finance the deficit resulting from having imported energy. It is a vicious circle”, coinciding in some points with Lazzari.

Ramiro Maradeputy for Libertad Avanza and financial youtuber, told this medium: “The movement of the blue dollar, with the shortage of dollars in the Central Bank, makes a fatal combinationbecause many are afraid of not being able to recompose their products and with good reason. decide start stocking up and at the same time they have to have a price cover. This accelerated inflation is accompanied by a recession, which is the worst scenario,” said the libertarian leader.

The Government prohibited the hiring of new employees in the State

“On the one hand, the increase in the informal rate does not automatically impact prices, since it is not a market that contains the demand and supply of inputs from the food chain. However, and this is currently the case, is a market that influences the expectations of the economy and even more so when the gap between the price of this market and that of the official one widens. Under those conditions, yes we can see possible effects from this market towards other prices.”, he explained to this medium Martin Calveiraresearcher at the IAE Business School.

Is the blue dollar a fringe market?

Lazzari disagrees with the spokeswoman for the Presidency, Gabriela Cerruti, who this Thursday made it clear again that the blue dollar is a marginal market and that “it does not impact the real economy”. “It is not a marginal market, there are many people as well as companies that have debts in dollar bills, so blue is the relevant variable in his life. Also, the blue dollar is the savings instrument, the refuge asset and the lifeline of a lot of people They don’t know what to do with their pesos. Attacking a thermometer such as the blue dollar is wasting time”.

For Mondino, it was also false that the “blue dollar is a marginal market. “It is not like that for many reasons, but the main one is because it is the only way that many Argentines have to save, so if the dollar is more expensive there is no possibility of saving or savings are reduced. If there is less saving, there is no investmentthen it affects the growth of the economy”.

How the record inflation of the United States impacts Argentina

Regarding the blue dollar, Ramiro Marra agreed: “The blue market is a social thermometer and economic, cannot be underestimated in any wayis the main short-term economic variable that Argentines use to make economic decisions”, which makes it clear that the ruling party’s position of downgrading the blue dollar is not the way to go.

Calveira differed from the other economists consulted by PROFILE: “ The blue dollar is indeed a fringe market compared to the official one where foreign trade currencies are settled (imports plus exports) around US$ 14,000 million per month. Nevertheless, since we can think of the economy as a network of decisions motivated by incentives and preferencesin a context of chronic inflation, many pricing decisions are made faster and taking information from other markets regardless of its size”, he began by saying.

“This is amplified in the face of accelerating inflation and uncertaintyconfiguring that the price-setting agents begin to take information from marginal markets to minimize potential risks and losses of profitability”, he added.

What do economists propose?

“Government have no alternatives to deal with the situation because he has no political or economic power,” he replied Ramiro Mara when asked about what tools the Executive has in its power at this time to reverse, circumvent or change the situation of the Argentine economy.

Lazzari answered the same question: “Today, what contains the most vulnerable to the soaring dollar it is an economic plan with political leadership that lowers the inflationary expectation and allows to slow down this current rhythm. It would seem that there is no real awareness of what is happening.”

For the economist Diana Mondino andThe Government still has some mechanisms to avoid hyperinflationbut it has to changeAlready” the direction of its economic policy. “If the government doesn’t do anything, you can have more inflation, or a recession, which means poverty and unemployment. Or both. I wouldn’t talk about hyperinflation”, Mondino pointed out, but warned that the way to avoid it is “open the export to enter dollars”, this, well explained, it’s not going to bring a currency storm, but “it will be 5 or 10% more, enough to break this vicious circle.”

Poor with work: the threat that stalks the Argentine middle class

Researcher Martín Calveira considers that the Government should coordinate a dialogue table “would be” with social organizations, regardless of the political sign. “This would at least generate a space of temporary cohesion. Meet the demands should translate into food and income aid, but the latter is strictly temporary and controlledthought of as a subsidy towards employment”.

“Simultaneously, an inflation stabilization program should be clearly announced that is convergent throughout the political space and with the other spaces. Otherwise, the temporary measures will have to be extended, which we already know in our country”, he concluded.

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