The blue dollar gave up the bill on Tuesday as it rose 8 pesos in one day, to close at $394. It thus set a new nominal record for the informal bill and brought the gap against the wholesale dollar to 92%.
Why did the blue jump? There were several reasons that came together for the informal to make this leap. Escalating inflation, political and economic uncertainty, and the drought’s effect on fiscal data are some of the reasons.
By the end of March Q1 inflation expected to close at around 21%. With this advance, the price index beats all dollars. In the case of the blue, even with this Tuesday’s leap, the increase for the year is 14%, at least seven percentage points below inflation.
At the same time, the official dollar has risen by 15.7% this year, while financial dollars, MEP and cash with cash have risen by 17%.
As, market perception is that blue is “backward” regarding inflation. This is nothing new: in 2022 the informal sector rose by 68% against inflation of 94.8%.
The story changes if we take the entire period of Alberto Fernández’s management up to here: blue went from $66 to $394, an increase of 497%, versus 368% inflation.
Therefore, the perception is that blue is cheap given the price increases over the last couple of years. This idea is reinforced by the increase in financial dollars in recent days.
Now the cash with liquid is $400 and the MEP at $386. Typically, blue is found at somewhere in the middle between the two financial dollars.
Until last Monday, blue was cheaper than the MEP, so this anomaly had to be corrected in the short term, as happened on Tuesday.
Although the current price is the highest in nominal terms, in real terms it is far from other jumps – “overshooting” in financial jargon – that occurred during the administration of Martín Guzmán. In October 2020, the blue reached 195 pesos, which is equivalent to an inflation-adjusted price of $699according to the calculation of the economist Salvador Vitelli.
The rise of the last few days is also driven by data showing that the shortage of foreign currency is dramatic. As for March, the Central Bank had to sell 1.4 billion US dollars and accumulates 2.3 billion US dollars in the year.
The ongoing drought shows that it will be a difficult year for reserve accumulation. This led the IMF to agree to make the objective for the first quarter of the year more flexible in order to avoid a government default.
At the same time, the effect of the drought is already being felt on exports, which fell by 19% in February. This means that in the first two months a deficit of $261 million. And it also affects tax revenues due to lower withholding income.
In February, the public accounts deficit was reached $228,000 million, a leap of 200% in one year, which once again complicates the objectives with the IMF.
This suggests that the renegotiation of the agreement with the Fund will be more complicated than expected and this the government will tighten its grip on imports even more to seal the fissures through which dollars exit.
With a scenario of fewer currencies and more restrictions and an election ahead, investors are trying to position themselves in a dollar that is still perceived as “cheap”.
How far can you go?
Estimates by economists indicate that financial dollars are also lagging behind and They should be around $430.
“The equilibrium dollar could be between $420 and $440, At this rate, buying the MEP dollar at around $390 looks like a good deal. There is room to continue to rise, especially as many investors will abandon their peso positions to start the dollarization process,” says economist Salvador Di Stéfano.
In this way, blue should soon rise above 400 pesos and follow the trend of financial dollars. At current values, a 1.1% rise is enough for blue to overcome the $400 barrier.
A factor that has so far contributed to the stability of the blues has been therate hike by the Central Bank which made this year so far that betting on the peso is more commercial than on the dollar.
Today a fixed term in pesos yields 6.4% per month. So far in March, blue is only up 5%. In the first two months fixed-term contracts returned 13%, against an increase of 6% in blue.
But that peso profit that drove the carry trade – taking advantage of positive rates to make a difference while the dollar is calm – it could reach its final stage.
AQ
Source: Clarin
