“There is no magic number”, assured an official source about the devaluation of this Monday of the official dollar of 22%. In the offices of the Ministry of Economy they reviewed the prices of sovereign bonds early and seeing a general drop of 15% after the result of the STEP, they decided on the exchange jump to contain the reaction to the triumph of Javier Miley in the markets. The decision has an undeniable impact on wages and the prices of food, fuel and fares. The minister’s team Sergio Massa He affirms that he has foreseen how to manage this inflationary transfer, although he acknowledged that in August it is not “reckless” to think that the index reaches double digits.
In the early hours of Monday, the crash of La Libertad Avanza anticipated a black Monday similar to that of August 12, 2019 and already made the dollar jump crypto at a fast pace As soon as the exchange wheel opened, the Central Bank set the wholesale exchange rate at $350 for the coming months in order to “improve control of financial variables.” “It was a proactive way of dealing with the consequences of yesterday’s political circumstances.“, they pointed out in the economic portfolio. At the same time, the rise is similar to what was suggested by the International Monetary Fund (IMF) in the middle of the negotiation for the technical agreement, of between 15 and 25%.
transfer to prices
there is not a passthrough estimated, but in the corridors of the fifth floor they assure that the effect on prices will not pass through fully. This Tuesday the Fair Prices program expires and that same day the Government will sit down to renegotiate with the companies of mass consumption goods and fuels, among other items. In a striking maneuver, Guillermo Michelthe head of Customs, will lead the negotiations instead of the Secretary of Commerce, Matias Tombolini. as far as he could tell Letter P, the strategy to reduce the increases will be to offer some kind of benefit in terms of tax advances to be deferred. Another option may be to offer an accountollar linked for those importing companies that access the Single and Free Exchange Market (MULC) and assume costs for the lag between the purchase of foreign currency and the payment of the import.
Wages
In the case of salaries, those around Massa ratify that adjusting them does not enter into the macroeconomic plans and that they will give free rein to the parity allow index salaries to inflation. Consulted about the implementation of the lump sum that the head of Economy resisted for months and anticipated that he would apply after the primaries, the sources assured that “they will be able to be part of the union negotiations.”
“Now it is another type of adjustment where the high business margins induced by the exchange gap are attacked and it does not require the real wage to fall. We are going to encourage the purchasing power of wages not to fall,” they explained. Over the weekend the Secretariat for Economic Policy released part of a report on the increase in gross margins of business profits and its impact on inflation .
rates
The devaluation is already felt in the costs of energy, which are dollarized, and will imply a transfer to the bills of public services. The tariffs have already had their increases and in the future “it will be necessary to see that the subsidies are not outdated”, indicated an official voice. In other words, new increases are being analyzed for all categories, households and companies, and levels, according to income.
Politically, the decision to make the currency depreciate meant breaking the political pact with the vice president Cristina Fernandez de Kirchner, but in the offices they do not notice discomfort or a preliminary agreement between the forces that make up the Frente de Todos. “It is a government decision“, they limited themselves to responding.
