Argentina accumulates in April an inflation of 8.5% in dollars
RIO DE JANEIRO, BRAZIL – Inflation in dollars, estimating a rise in prices in April of almost 6%, is 8.5% in the four-month period, similar to that projected in the US one year from now. In pesos, it is estimated at slightly more than 24.5%. The recovery of the dollar in the last rounds prevented that number from being 10% for the quarter.
The difference is that the rise in prices for the North American Federal Reserve means a drama and in Argentina it is neglected as indicated by the latest measures adopted to expand subsidies, while Congress deals with a moratorium for future retirees that would cost around US$500 billion annually.
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Argentina, in this way, adds two problems: inflation and exchange delay. If the dollar had accompanied inflation this year, the rise in the cost of living measured in foreign currency would be negative.
DEAD CALM
But the tranquility of the North American currency served to demonstrate that the exchange rate anchor was a failure because the rise in prices in pesos continued on its way as if it did not exist.
And this is due to the scarcity of dollars, which means that importers, faced with the expectation of not being able to obtain foreign currency at the official exchange rate in the future, price their products at the dollar value in cash with liquidation, which is what allows them to pay their suppliers from abroad in a timely manner: in cash instead of the six-month term required by the Central Bank.
Exchange policy affects inflation and reserves. In fact, on Friday, the Central Bank bought US$80 million and reserves increased by only US$12 million, due to the fact that it had to supply foreign currency to imports.
But the strategy is running out of steam as the dollar has risen against the world’s six major currencies to the highest levels of the century.
At the same time, US Treasury bonds had a strong price collapse that raised their income to 3.123%. This was the worst first quarter in history for North American stocks which lost almost 11% for the year. The yield in the first days of January was 1.5%. That is, it doubled. The same path followed the Spanish and German bonds that tripled their income in that period because the rise in the dollar, driven by the rise in interest rates, made them lower their prices to accommodate the higher incomes demanded by the market. Argentina ignores this scenario. Almost all countries raised their rates. Brazil on Thursday placed it one point above inflation at 12.75% annually.
CRYPTOCRASH
In this scenario, bitcoin, the most popular cryptocurrency, fell 3% over the weekend and traded at US$34,400 yesterday. At the beginning of the year they were worth more than US$46,000.
The AL30D, the most abused bond in Argentina and used to carry out financial dollar operations, was more successful than bitcoin. But despite having a smaller drop than the cryptocurrency, on Friday it fell 2.68% and pushed the MEP dollar up $2.90 to $208.49. The GD30, which affects the spot price with settlement, fell 3.41% and the currency quoted in this market increased $1.55 to $208.16 and was once again below the MEP dollar. An absurdity that only a volatile and blind market can afford. The cable dollar, which allows foreign exchange to be placed in foreign accounts, cannot have a negative price, unless there is a wave of foreign currency inflows, something that is not happening at this time.
The indexed bonds, the Boncer and the Lecer, continued to rise because investors believe that inflation will be higher than that calculated by the consultants in the REM, the survey carried out by the Central Bank, which is 65.4%.
Today begins a week marked by the dollar, haunted by the biggest crack in the government. The vice president’s speech on Friday disturbed the market as much as the news that the State could lose the YPF lawsuit and would have to pay a sum close to US$20 billion. If this fact were true, the company would have cost US$25 billion, almost 10 times more than its current book value.
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