According to Morgan Stanley, the devaluation will likely occur during the first months of 2022.
Bank analysts rule out a reduction in public spending at the same time.
According to a private report from the bank and investment company Morgan Stanley, Argentina plans to devalue the national currency after the legislative elections that will take place on November 14, 2021.
According to the analysis, signed by economists Fernando Sedano and Lucas Almeida, “it is a difficult political decision to make” since it would translate into “a peak of inflation before the end of the year holidays, generally a sensitive period from a social perspective ».
For this reason, it is that specialists assume that the devaluation will take place at the beginning of next year. “The magnitude of the movement is difficult to predict, but it is reasonable to expect something similar to 2014,” argue the economists. They refer to the devaluation of 15% in just three days, which occurred at the beginning of that year.
Add the report that, although a Morgan Stanley would like the decision to be accompanied by a consolidation of fiscal accounts, this probably will not happen by reducing public spending. “This government is prone to greater state intervention,” says the investment firm, adding: “we do not expect a relaxation in the country’s tax burden, which does not bode well for investment.”
The latter is consistent with recent statements by the Minister of Economy of Argentina, Martín Guzmán, who, before a group of businessmen said days ago: “a country with low taxes and low public spending is not our idea.”
However, Guzmán denied Morgan Stanley’s claims. “There is no expectation that there will be a devaluation after the elections,” the minister said in a television interview. He added that “you have to handle yourself seriously and bring peace of mind to people.” In addition, he blamed the previous government, chaired by Mauricio Macri, for having “left a brutal dollar shortage problem.”
Other analysts have spoken along lines similar to Morgan Stanley. Among them, the director of the Bull Market Brokers brokerage house, Ramiro Marra, who even maintains that the devaluation (evidenced in the price at which dollars are traded in the informal market) could occur before the November elections and, in fact, it is already happening.
Indeed, the value of the free market dollar (or “blue dollar”) has increased by 6%, measured in pesos so far in June. It went from 156 pesos to the dollar to 166 pesos at the time of writing this article.
How to escape devaluation in Argentina?
Given the inconvenience of maintaining savings in the national currency, Argentines have historically resorted to the Buying dollars to preserve your wealth. In the current context, with government restrictions on access to foreign currencies, this practice is difficult.
CriptoNoticias has reported how Some Argentines find bitcoin (BTC) and other cryptocurrencies a useful value store tool. For example, in the last two years, according to the information provided by the exchange Bitex, which is graphed by investing.com, BTC increased its almost 12 times, if measured in Argentine pesos (ARS).
The cryptocurrency passed, in that period, from ARS 477,000 to the current ARS 5,549,000.
In the last two years, the price of bitcoin increased 12 times, measured in Argentine pesos. Source: investing.com.
Even for those who are not willing to endure the volatility that BTC tends to have in short periods, the cryptocurrency market offers the possibility of save in stablecoins (or stablecoins). These are tokens that maintain parity in their price with that of another asset, generally the US dollar. The best known are DAI, USD Tether (USDT), USD Coin (USDC), Binance Coin (BUSD) and Paxos Standard (PAX).
The aforementioned investment company, Morgan Stanley is no stranger to bitcoin’s potential and to the requirements of its clients. As this portal reported, the company already offers BTC funds and one of its directors considers that the cryptocurrency could “undermine the reign of the dollar.”