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Cottani Says Dollar Strategy Bolstered Reserves but Recovery Remains Fragile

He warns that keeping the peso stable requires tight monetary policy that will limit broad growth and that seasonal drops in currency inflows could increase exchange-rate pressure in the second half of the year.

Overview

  • Former viceminister Joaquín Cottani praised the government's managed, gradual depreciation of the dollar and its accumulation of foreign reserves, which he says have passed the US$10 billion mark.
  • Cottani described the current expansion as a 'reactivación bipolar' where sectors with access to financing grow while many others remain stuck.
  • He said maintaining an orderly exchange rate without a larger depreciation forces very restrictive monetary policy, a choice that can choke wider economic reactivation.
  • Cottani warned that seasonal factors, lower foreign-currency inflows and rising private demand to hoard dollars could raise pressure on the exchange rate in the second half of the year.
  • Drawing on his experience in the Economy Ministry under Luis Caputo, he concluded that the government's macro steps have reduced near-term risks but do not provide solid grounds to expect a broad, sustained recovery soon.