Thursday , October 21 2021

Dollar to bed, peso to bank: and end of recession? – 11/25/2018


The Organization for Economic Cooperation and Development (OECD) anticipates that, after strong momentum in the past two years, the world economy is on the road to slowing down.

Commercial war United States and China (the key point of this week's G20 meeting in Buenos Aires), the consequences of Britain's exit from the European Union and the potential increase in US bond interest rates. They aim to complicate the global economic landscape.

Developing countries will pay part of the consequences of this change in developed countries and, in this context, Argentina will play the game additional to do so in the election year.

As part of the cocktail it is an ingredient in the process of adjusting the hand of the Argentine economy in hand with stamp on the dollar between June and September it was produced because the international market cut state funding.

In the past seven weeks, and after extraordinary assistance (amount, US $ 57,100 million, and speed) from the Monetary Fund, the Government managed to stabilize the currency market.

This result is relevant from two financial results: wholesale dollars $ 36.63, with only 0.1% increase in a month, and a strong increase in deposits in individual pesos in banks.

The exchange rate is calm, in fact, leading to some predictions, from studies of Orlando Ferreres, for example, starting to talk about November inflation could be closer to 2.5% of the 3% that the Government estimates is optimal.

A quieter dollar will help moderate price increases after a run that drives inflation and weakens the purchasing power of wages.

Calm, also and like traditional in Argentina, encourages the diversion of a portion of the dollar collected in times of uncertainty for placement in pesos in the financial system.

From the comparison of the evolution of deposits and personal loans in pesos conducted by the Study Ricardo Arriazu It seems that the fixed period grew by 282% between October and September.

Deposits in dollars also grow but, in this case, deep placement in a savings account.

A quick reading shows that those who bet on high interest rates in pesos are willing to take more risks than dollar holders who put them in the eye account to have more.

But the relevant fact is that, whether it is peso or dollars, deposits grow while loans, the other side of the reality of the bank, go down and sharp.

PLoans in the peso fell $ 21,344 million between September and October and continues to decline in the first week of November.

Credit in dollars (remember that banks can only agree with companies or export activities) fell by almost US $ 600 million in September and continued to fall around US $ 300 million in October and early November.

In that bank account it was that they captured the dollar that most of them were embedded by the Central Bank, and on the side of the peso was that they took deposits from the private sector which, for the most part, were placed in Lyrics of Liquidity (Leliq) The Central Bank now pays around 61.7% per year.

The results are sought Guido Sandleris, The President of the Central Bank, to advance with the aim of zero growth of the amount of money, in an effort to keep the dollar and inflation calm.

A photograph of that fact shows that most of the Argentinian dollars are still in the bed, that one goes to the peso and is in the banks but the deposits they don't turn into loans. Expect a way out of recession without wasted credit growth. How long is this activity with the hand brake?

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