• Fri. Mar 1st, 2024

Exchange Rate Uncertainty: The Consequences of Non-Approval of Omnibus Law

ByEditor

Feb 10, 2024
Important Decision Looms for Argentina’s Government: Devaluation or Status Quo?

The non-approval of the Omnibus Law has resulted in significant macroeconomic challenges that will soon come into play. One of the major issues at hand is the exchange rate policy, as the Central Bank will soon have to decide how to proceed. None of the possible alternatives are easy, and they all come with their own costs.

When discussing the exchange rate, it is crucial to consider the real exchange rate, which is adjusted for Argentine inflation and that of the rest of the world or the main trading partners. Current projections show that the real exchange rate will reach approximately the same level as the average of last August by the end of this month. This poses challenges, as it may not be possible to continue with a 2% monthly depreciation given the higher expected inflation in March and April.

There are various arguments related to the exchange rate policy. Some argue that a cheaper exchange rate could benefit the economy, as

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