Dualismo cambial na Argentina e na Venezuela

E sua insustentabilidade. Uma analise de economista do Citi group.

Argentina and Venezuela– The Unstable Economics of Dual Exchange Rates
Joaquin A Cottani
Citi group Research
Emerging Markets Economics Today
12 March 2013

This piece is a summary of our Argentina & Venezuela Macro View - The (Unstable) Economics of Dual Exchange Rate Regimes

Argentina and Venezuela have de-facto dual exchange rate systems featuring an official peg and a black market float. The fact that the float is "black" rather than "white" or "grey" is a mere technicality. Effectively, the black market rate reflects the scarcity value of the dollar and the premium between this rate and the official one is an implicit tax on exports and a subsidy on permitted transactions, including authorized imports.

A dual exchange rate system is the consequence of quantitative exchange controls. These controls affect "non-essential" imports, including tourism abroad, and several categories of capital outflows, including offshore investments, profit remittances, and the simple hoarding of FX by local residents seeking to hedge against inflation or devaluation. Like any flexible exchange rate, the black market one is driven by market forces.

The Venezuelan dual exchange rate system predates the Argentinean one by more than a decade, a fact that bears testimony to the longevity that this kind of arrangements can have, despite the distortions they create, if the right conditions are met. We argue that Venezuela's larger current account surplus as proportion of GDP, tighter control of exports and imports by the government, and the introduction of SITME between 2010 and 2012 explain the longevity of its multiple exchange rate system despite the significant and growing premium observed though the years between the parallel/black market and the official one. We warn that, in Argentina, this is unlikely to be the case, hence a multiple exchange rate system, even if legal, is unsustainable.

In Argentina, the dual exchange rate system is a more recent phenomenon. It exists since October 31, 2011 when, to cope with an impending currency crisis, the government imposed tight controls on the buying and selling of foreign exchange by the public. A difference between the Argentine and Venezuelan dual systems is that, in Venezuela, the official rate is an adjustable peg whereas, in Argentina, it is a sliding or crawling peg. At present, the official USD rate is 5.05 ARS in Argentina and 6.3 VEF in Venezuela while the black market rate is around 8.0 and 25.0, respectively. It is worth noting that, in February, the rate of depreciation of the ARS in the official market reached 16% YoY against a "true" inflation rate (as measured by private consultants and opposition members of Congress) of around 25%.

Expectations of devaluation are part of the explanation of a high black market premium. The other part is massive injections of liquidity to finance fiscal deficits and monetize balance of payments surpluses. In this sense, reducing the black market premium while maintaining exchange controls will require a combination of both official devaluation and monetary and fiscal contraction in both countries.

Looking at what is happening with the foreign reserves in Argentina and Venezuela, it is easy to infer that their dual systems are unsustainable without a maxi-devaluation. Unless monetary contraction happens some time soon, which is unlikely due to the fiscal dependency of monetary policy in both cases, another maxi-devaluation in Venezuela and one in Argentina (the first since 2002) are almost sure bets.