All fires: the silenced factor to know where the dollar (and the economy) is going

The first record is that the Government, it seems, will put a stop to this bloodletting. The level of imports sought for June will logically go down, in the first place, it will cut, they say in the dispatches, to the $6 billion and for this the Palacio de Hacienda aims to implement a series of window controls that could be reinforced with the heterodox method of phone calls.

The official version of this maneuver is that the focus will be on automatic licenses, especially in those sectors that do not contribute directly to economic activity, and whose decline in activity, from having less foreign currency, does not compromise too much that dynamic.

the unsaid

But there is another question that will seek to be solved within so much uncertainty: a kind of unofficial version that runs through the ship of the SS Imbalance inside. What percentage of what the main companies in the country import leaves a part of the official dollars abroad? In other words: What level of overinvoicing of imports is in good health among those companies that take it as a mechanism for transferring profits abroad?

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Image: Loginnews

To put it in Creole. An import overinvoicing operation implies that imported goods are valued above their real value in order to transfer more foreign currency abroad.. Those currencies are, of course, what these companies obtain at an official exchange rate.

The magnifying glass and after

There are more questions: What possibilities does the Government have to detect if an input provided by a certain parent company to a subsidiary that has activity in Argentina is overinvoiced?

In this sense, and based on what was stated above, there are those who make sketches. One of the busiest is that, in addition to energy payments and a price and quantity effect in the number of imports and as part of the import boom, one might wonder about another relevant element.

In reality, they are two intertwined unknowns, a kind of two-headed monster, whose answers derive, in turn, different scenarios.

1-What can happen if the overinvoicing of imports continues?

2-What would happen if, as it seems, this mechanism has an expiration date from the fall in the level of reserves?

where is the dollar going

The answer to the first question is closely connected to the levels of dollar outflows from reserves. If the fast-track of official dollars continues, which are probably containing a significant overinvoicing of imports, then the outflow of dollars from reserves would accelerate, with the consequent deterioration in financial conditions, an increase in country risk due to the distrust generated by this scenario, fall in the possibility of the Government to continue financing itself in the debt market in pesos.

The second question has another answer. If this “system” is cut, companies would have less incentive to follow, strictly speaking, many of these companies would have to resort to financial dollars when the official dollar window is closed, and this could influence future increases. That is, once the previous “model” was exhausted, they would go up to a new one.

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Before finishing one more thing. Many companies that overinvoice imports bring those dollars later through the CCL market. This is the explanation why there is a wide supply that, contrary to inflation, keeps the values ​​relatively stable.

Of course the exercise is not exclusive. The cataract of precautionary measures that the judges In the first instance, they grant claims from importers for obtaining the dollars to carry out operations. Also, the desire of numerous companies to accumulate stock of inputs that are paid in official dollars.

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