Another drought

The drought of currencies affecting the Central Bank changes official market - at the start of 2013, and which paradoxically is still called "unique and free" (MULC) after 16 months of foreign exchange stocks - only could overcome with illusory rain of confidence in economic policy. And hence the prognosis is not encouraging. Not even with the tangible rains that brought some relief to farmers, worried about the next harvest yields in recent days.

The Central Bank (BCRA) just highlight, in its latest report on the MULC, that capital flight fell 84 percent last year, down US $21,500 million in 2011 to only 3400 million in 2012, as a result of exchange restrictions applied just Cristina Kirchner won his re-election. But staying with that data would be tantamount to see reality with a single eye. That decision had enormous costs, both in terms of (DIS) as economic confidence. The exchange rate trap (more forced pesification of mortgage loans) paralyzed the housing market and contracted private construction; barriers to imports halted activity and employment in many industrial and commercial sectors and the prohibition of turn utilities made back the investment. The result was the strong slowdown in the growth of the economy: official GDP lost no less than 7 percentage points, since it rose only 1.9 percent last year and 8.9 percent in 2011.

If the objective of the trap was "shielding" the reserves of the BCRA, the result was opposed to the wanted: since then there was a cumulative loss of $5652 m. Thus, the stock drilled last week the floor of US $42 billion (to be located at 41.871 million), when to October 2011 amounted to 47.523 billion. Came only in what will 2013 drainage 1419 million, largely attributable to a new round of fall of deposits in dollars (almost $ 400 million and whose banking lace integrates the reserves of the BCRA). The fall of reserves is explained in that closing down the exit of foreign currency, much occurs with the entry. No one brings $ uncertainly take them. A report of the Broda study emphasizes that this situation is contrary to most of the countries of Latin America, where you register a strong capital flows and an increase in reserves, which in the past 12 months was almost $22 billion in Brazil; 13.7 billion in Peru; 5 billion in Colombia and 2250 million in Uruguay.

Clamping device encourages also the search for any silver lining to make currency at the official rate of Exchange, especially with a foreign exchange gap higher than ever. Proof of this is that, according to the Central Bank, the sale of foreign currency for tourism abroad increased 54% in 2012 and reached US $7300 million, compared to 2600 billion entered by foreign tourists.

With these data to view and at this point in the holiday season, already you can not argue- as in December and January-strong summer climbing in the blue dollar was due mainly to the greater demand, reinforced by the random authorizations of the AFIP to buy foreign currency. Among economists not aligned with the "model", there is a consensus in that the reasons should be sought in the abundant monetary emission of the BCRA to year to cover the fiscal hole in the trend of savers and companies get rid of pesos by the scarce appeal of interest rates of 14% per year against inflation more than 10 points higher.

Despite attempts to formal and informal to contain the dollar blue, quote is now located at 7.80 pesos, with a gap of almost 55% against the official dollar. In the past 12 months the rise climbs to 65%, which debunks the phrase that loses who bets on the dollar, but contributes to feed back into inflationary and devaluatorias expectations. To neutralize them, the Central Bank absorbed pesos (without raising the interest rate) and fell from 25% in December to 15% in January and February (annualised) adjustment in the official exchange rate. But the Government of CFK resorted, without success and with ephemeral results, to informal ways to inject greater supply in the parallel market (through "friendly entities" or Government agencies). According to experts, these little transparent mechanisms would not only produce strong gains to their executors but that at the end of road, end up reducing the reserves of the BCRA. But also contribute to expand the volume of the market blue, whose size is unknown but he is estimated could operate between seven and 10 million dollars a day. If this were so, it would not have been so expensive to neutralize the tourist demand. For now, they only fuelling rumours about a possible exchange splitting.

Wetting the ear

Another official diagnostic error was to resort to conspiracy theories attributing the lesser offer currency in the MULC alleged retention of soybean producers, without considering the previous harvest was so poor drought (40 million tons) that little was left to save (between 2 and 4%) to finance expenditures of the next. Thus arose the arbitrary controls of the AFIP, rural entities understood as a provocation, as well as the uncertain threats to recreate the National Grain Board. In reality, the shortage of foreign currency was due to lower exports of wheat in the current campaign, which months ago the Government tried to stimulate at the wrong time, when the producers had already reduced the area sown. But the discomfort created by these operations led to rural leaders threaten to turn the Government where most could affect it. Or withhold the next harvest, that if soybean well due to climatic factors not reach volume record that was initially envisaged (55 million tons), would be between 25 and 27% higher than in the lean earlier campaign. True or sobreactuada, that threat makes the volume can hold producers with greater financial back will be equivalent to a depletion of the harvest, which the Government viewed as a salvation table for 2013 not only by income from foreign exchange and fiscal resources for retention, but also for its effect on sagging economic activity.

However, the most paradoxical data within this bid is in the Argentina not missing dollars. Figures difficult to ascertain but years ago are given by certain, indicate that some $150,000 million kept in safe deposit boxes, mattresses or accounts abroad, declared or not would exist outside the economic circuit. And even the Government itself of CFK gives valid a discussed estimate of the Federal Reserve, according to which the Argentina was in 2006 - outside the United States - the second country behind Russia with greater circulation of dollars. So they turned to the investment or activity more confidence that controls would be needed.