The Córdoba Stock Exchange prepared a report entitled “Shortage of dollars: What impact does the World Cup in Qatar have?“, through which he performs an analysis focused on the fact that “there is no statistical evidence to support that the World Cup has a determining effect on the Argentine exchange balance” and that “the numbers show that the elimination of exchange distortions would favor the opening to the country’s trade.
After listing a series of factors that affect the regional economy, the agency points out that “In recent weeks the debate has grown on the demand for dollars related to consumption, air tickets, expenses made abroad and purchases of goods and services with a card. offered by non-residents. They all use official dollars, that is, from the BCRA. Due to the proximity of the World Cup in Qatar, there began to be talk of a “Qatar dollar” in relation to a new differential effective exchange rate”.
Recently there was “a demand for dollars for the concepts of Travel and other card expenses plus those corresponding to passenger transport since 2003. The demand for dollars associated with these concepts clearly has a seasonal behavior and, also, shows a change in the last 20 years with respect to the increase in the consumption of services from abroad and tourism”. He also points out that “the demand for dollars by outflows abroad is pushed by the exchange delay. It even showed sensitivity to the traps, especially those of 2014/2015 and the instrumented post PASO 2019, the year in which the PAIS tax was also created.”
“In 2020 and 2021 there was a break due to the COVID-19 pandemic and the restrictions that affected international tourism. There is no statistical evidence, however, to support that the Qatar World Cup has a determining effect on the Argentine exchange balance: taking the soccer World Cups from 2006 onwards, the periods prior to the start of the competitions do not show a special dynamic”.
The use of dollars
“There is a growing debate about the demand for dollars associated with tourism and card spending abroad, as well as the savings dollar, with respect to the foreign exchange that comes in from exports. Those dollars that come in, are precisely those that are needed to the import of goods and services and for financial payments The demand for travel and card payments were 2.5% of the global demand for foreign currency between 2003 and 2010, they went to 7% on average between 2011 and 2019, to fall again in the pandemic (2020 and 2021) to values close to 3%. Between January and August of this year they returned to 7%,” they point out.
Graph 2 “illustrates the relative importance of travel and tourism, comparing it with the demand for dollars for the import of goods by the industry. This segment fell from 20% of the total demand for dollars in 2003 to an average of 10% in the years prior to 2020. Although in the last two and a half years it increased, it is not explained by a greater sectoral demand, but by the fall of the other demanders, such as tourism, travel and spending with cardsbut also due to the drop in reasons such as formation of external assets, in the context of the tightening of the trap”.
Argentina in the World Cup
“The recovery in the demand for dollars, particularly for expenses abroad and travel, is linked to the pandemic and the exchange delay. Even with the taxes on the official dollar, some consumers continue to perceive that the price of the currency is relatively low, especially compared to the value it could have if there is an upward correction of the exchange rate.That would be the vision that encourages greater use, although its relative importance continues to be limited compared to the rest of the destinations of the dollars that enter to the country and go through the BCRA”.
The BCC report goes on to explain that “A policy aimed at eliminating exchange distortions in the different markets would aim to increase exports in a sustained manner and, in this context, allow local producers and consumers access to goods and services, domestic or imported, which they judge necessary or more desirable”.
“On the contrary, greater obstacles and distortions generate the expectation of a future correction that will reduce the flow of both outgoing and incoming currencies, which goes against a greater integration of our country into the value chains of the world economy. By way of this greater isolation, Argentina will be left out of the “economic world cup.” The World Cup in Qatar has nothing to do with this, “he concludes.