The former Minister of Economy raised the unification of the exchange rate and pointed out that the debate on “dollarization” is being carried out “out of time”
By iProfessional
21/04/2023 – 9.08 pm
The former Minister of Economy, Domingo Cavallo, considered today that “There are no economic causes for inflation to exceed 7%” and stressed that if this percentage is exceeded, there will be consequences for the political factor.
Likewise, he maintained that the discussion for dollarization is taking place “at the wrong time”, because before it is necessary to make a series of structural reforms and raised the need for the unification of the exchange rate. In this sense, assessed that the dollar at $440 “is too high”but warned that “it can be higher until it is clear how the economy will be in the future.
“It will start to drop the day a government announces good policies for the future,” he emphasized.
Cavallo’s harsh warning on inflation
The former official explained that “monetary and Leliqs issuance is growing at 7% or even somewhat less”, for which he estimated that 7% would be a ceiling and that in case of exceeding it it would be due to the political climate. Cavallo also referred to the country’s economic prospects in an interview with Pulso Continental, which is broadcast on Continental radio.
“I hope that the situation does not end in a total lack of control,” Cavallo was hopeful and considered that “once the opposition candidacies are defined it helps a little to control the situation.”
The former minister pointed out that the thinking “of the candidates for Together for Change does not differ much in what they think. That is why it would be better to listen to economic advisers because they have to differentiate the product.
He also suggested that “it would be important for Milei’s advisers to speak with those of the JxC and discuss more among themselves to clarify the future outlook.”
Massa’s goal of reaching 3% inflation in April vanishes.
Cavallo affirmed that “the issue of dollarization is being discussed at the wrong time, because before thinking about the stability of the exchange rate, a series of reforms must be carried out and the exchange market unified.”
The new price of the DOLLAR projected by more than 40 experts
The consensus of the experts surveyed by FocusEconomics states that the economy would contract 1.9% in 2023, which represents a decrease of 1.4 percentage points with respect to the estimate made last month (March).
At the same time, higher-than-expected inflation in Marcharound 7.7% per month, also has an impact on future projections.
“Average inflation is projected to be markedly higher this year than in 2022, amid depreciation of the peso and monetary financing of the fiscal deficit. Volatile energy prices and fiscal ‘largesse’ ahead of October elections are key risks,” the experts detail.
In short, the economists surveyed estimate an average inflation of 102.8% in 2023which is 4.1 percentage points more than the estimate made last March for the whole of this year.
Thus, the surveyed analysts consider an agreed price of the US wholesale ticket for the end of the year of $363, that is, 15.5 pesos (5%) more than what was expected in the previous March report for the same period.
