Andrés Lerner 
The government insists that the dollar will fall. This time, the message was addressed to representatives of the export sector and the agricultural sector. The economic team reiterated that the reduction in export duties is temporary and gave some clues about the tax reform project.
Meanwhile, doubts persist about the sustainability of the peso appreciation scheme: outbound tourism is growing, inbound tourism is falling, and there are record visa requests to China. Spending the long weekend in Salta has become more expensive than doing so in Lima or Santiago de Chile.
Last Friday, three of Minister Luis Caputo’s closest associates visited the Rosario Stock Exchange. They did so to outline an overview for representatives of the agricultural sector and the export sector of what they define as the “third phase” of the economic program. Present at the meeting were Juan Pazo, head of Argentina’s Customs Revenue and Control Agency (ARCA, by its Spanish initials); Federico Furiase, director of the Central Bank; and Felipe Núñez, advisor at the Economy Ministry.
According to sources who participated in the meeting, the officials indicated that it is better to sell grain now because the exchange rate will tend to decline. “Don’t expect a devaluation because it won’t happen,” they stated. They also reiterated that the reduction in export duties is temporary. Separately, one of those present was struck by the fact that in this case, the Argentine Rural Society had not filed any complaints regarding the matter.
Business leaders agreed that the government’s priority is to lower inflation. Milei wants the dollar to fall to the lower end of the range. To achieve this, he needs the supply of foreign currency in the market to remain stable, but the export sector has reservations.
“There will be a liquidation in the next two weeks,” said an experienced source in the export sector. “There are producers who have to sell at AR$300,000 (US$252.10) a tonne even if they lose money because they have to pay debts, but after that, they’re not likely to sell at this price.”
Asked at what dollar rate sales could start to flow, the source was emphatic: “at AR$1,400.” Nonetheless, he acknowledged that AR$1,300 could also lead to higher sales volumes. Everything remains to be seen; the harvest is somewhat delayed due to the heavy rains that occurred weeks ago in the core region.
Record number of visas to China
The trio of officials was confident that the currency appreciation model will improve real income and increase demand, while supply will increase due to tax cuts and labor reform. But various sectors question the sustainability of the model and its effects on domestic production.
Industry is still struggling to take off. March’s picture was poor; consulting firms anticipate a further decline. But beyond the underlying situation, something structural is happening: companies are relocating their production, links in value chains are being replaced by imported products, and entire sectors are rethinking their viability in the new context.
Meanwhile, a flood of business people is traveling to Asia in search of import opportunities. What? Whatever. The sectors are highly varied, and business people themselves are open to surprise by the attractive prices resulting from the currency appreciation.
Sources with access to the Chinese embassy in Argentina confirm an exponential increase in visas for travel to that country, and according to INDEC data, purchases of goods from that country grew 86% year-on-year.
Salta more expensive than Lima
Argentina being expensive in dollars brings striking situations. While mass consumption remains at its lowest levels in recent years and jobs in the formal sector continue to fall, outbound tourism is growing at a frantic pace: up 98.8% year-on-year in March. In the same month, foreign arrivals to the country plummeted 24% compared to the previous year.
The issue is easy to decipher; it has to do with incentives. Travel agency Despegar is promoting various packages for Argentina’s Labor Day long weekend. All include flights and three nights of accommodation. In Salta, it’s a three-star hotel; in Santiago, Chile, it’s a four-star hotel that includes breakfast, the same category offered in Lima, with breakfast, a pool, and a sauna. The Argentine destination is priced at AR$1,186,000 (US$996.63), while the Chilean one is AR$731,530, and the Peruvian one is AR$1,053,000 per person.
The government says this gap will not be narrowed with a devaluation but with labor and tax reforms. At the meeting at the Rosario Stock Exchange, the economic team gave a hint of the first taxes that could be lowered: check taxes and withholdings. Meanwhile, the challenge falls on the dollar and reserves because tourists can now demand foreign currency on the official market.