Download
Editorial: 900 Reasons for the Run on the Peso
The government is not generating any credibility. It insists on patches that have diminishing returns: a special exchange rate for oil exporters, small and medium businesses and now perhaps for the auto industry. Some corners of the ruling coalition say that next year they will have a primary surplus while lowering taxes at the same time. This has no logic; its only purpose is positioning themselves better before the elections. The market in a broad sense, that is, not only the financial system’s big players but all those who have or may have pesos, are shouting out their lack of trust.
Bitter Expectations for the Real Sector of the Economy
-Industrial production rose slightly in August (+0.5%) although compared to last year it is still down (-3%). The hiring expectation had the worst result since 2021.
-Construction fell 1.2% in August, and the outlook for public works in the coming months is pessimistic.
-Formal employment expanded by 0.1% in August; however, the construction sector experienced a contraction of 0.6%. Expectations for hiring in the upcoming months are slightly positive.
The Map of the Lost 18 Billion Dollars
-Reserves fell again in September. In the last 12 months, international reserves fell by over USD 10 billion. So far this year the drop is almost USD 18 billion.
-Exports contracted because of the drought and imports were also very low due to the exchange market restrictions.
-The Central Bank spent almost USD 3 billion to contain the MEP exchange rate, in a context where it does not have own dollars in its balance sheet.
