Money laundering dollars come in and tourists leave, another Argentine classic

Tourism agents were the first to notice: there is a avalanche of purchases of tickets and packages to travel abroad.

The central argument of buyers and sellers is the fall of the blue dollar and free dollars (MEP and cash with settlement). Blue ($1,195) drops 7.7% in one month and the CCL, 4.8%.

Those falls, endorsed by the President Javier Milei, which confirmed that his idea for The future exchange rate unification was for the blue dollar to go down and not for the official one to go upput together in recent weeks a very good business for whoever had their weights placed.

The historical “carry trade” came back strong. A Treasury bill that yields just under 4% with the blue falling almost 8% creates a more than interesting return in the short term. The banks draw up accounts.

The calm of the exchange market was largely consolidated in the heat of the declaration of dollars that generated the money laundering.

The deposits of what could be considered mostly “mattress dollars” For now, they reach US$12.8 billion, a shocking number that, from now on, could seek another destination than simple savings on banknotes.

People deposited, and a question will be what it is the subsequent destination of these currencies: Will the dollars stay in the banks? Will they go to the purchase of real estate? Or cars? Time will tell, but in the meantime, there is a part of the financial cost that has already begun to have consequences.

One of them, highlighted by a report by the consulting firm 1816, is that among the reasons that explain the greater purchases of dollars by the Central Bank are “the local loans in dollars, whose stock rose almost US$ 1,000 million since mid-August.”

Deposits in dollars in banks grow, this generates loans that are granted in pesos at the official exchange rate and it is at that moment when the Central Bank can compute the entry of foreign currency into the net reserves that remain in the negative field.

The latest data reported by another consulting firm, Outlier, indicates that in September the Central’s “net” reserves ended negative by US$ 7,426 million another shocking number. It should be remembered that the legacy left by the previous government in this matter was negative reserves of almost US$ 11,000 million.

In the times of “cheap” dollar the passion of a part of the Argentines returns to concentrate on the demand for foreign currency for tourism.

In the latest issue of Economic News from the Mediterranean Foundation, a notable title is: “The outflow of tourism dollars takes a hit and turns on warning lights.”

And he argues: “In the first half of the year, outbound tourism demanded US$3.9 billion and the balance (net of inbound tourism) was negative by US$ 1.4 billion. It is possible to predict that in the year the demand for dollars for outbound tourism will be close to US$ 7,500 million and the balance could be around a net outflow of US$2.7 billion”.

The exchange table showed a result in the July-August two-month period to take into account regarding the current account deficit that exceeded US$ 2.9 billion.

1816 analyzes the point by saying that “this deficit is the result of three things”: 1) the blend dollar, which means that a part (20%) of exports do not enter the Central reserves; 2) the appreciation of the peso against the free dollar” that led the outflow of dollars for tourism to multi-year highs (the sector does not use the official dollar today, but those numbers must be taken into account to think about unification scenarios) and 3) the interest on the debt that, due to the country risk, cannot yet be refinanced in the market.”

The scenario leads one to imagine possible solutions that consultants and the government have been contemplating for some time:

A devaluation that accommodates the exchange rate (the Government denies it by all means and assures that it will continue with the 2% monthly increase), the elimination of the dólar “blend” to transfer more dollars to the official market (the Monetary Fund has been asking for it for a long time and the Government says it will eliminate it at the end of the year) or for dollars to arrive from the IMF or the much-mentioned Repo loan (guaranteed by bonds or gold from the Central) of international banking.

We will have to wait for the signs that emerge in the coming days after the meetings of the Secretary of Finance, Pablo Quirno, with the IMF. Meanwhile, a part of the market celebrates in the heat of money laundering dollars and the “carry trade.”