He blue dollar woke up on monday and jumped $8 in a single day to reach $408, a new nominal record. The reasons of this increment goes from to need for coverage of those who are coping informally for fears that the economy will worsen after the 7.7% inflation known on Friday, until an offer that was significantly reduced after foreign tourists stopped providing it and started using MEP dollar credit card.
1. Hedging against inflation and elections
THE high inflation – the March issue was the highest since April 2002 – forces government to accelerate devaluation of peso e it also drives the rise of the parallel dollar. To keep up with March’s inflation, the dollar would need to rise $30 for the month.
Moreover, The electoral campaign heats up. “The pressure today comes from the MEP. What we have seen is that the interest rate speculation (taking advantage of the high rate while the dollar is more or less stationary) is becoming increasingly risky (and the rate is becoming obsolete as inflation rises), more so with all the rumors and pressure from the IMF. Sooner or later the electoral question will get confused”, they tell the market.
2. Low supply
“Blue is a broken market, practically since December tourism has disappeared as an offer and only the ‘small’ is left”, explains an operator. AS, as soon as demand increases a little, it skyrockets.
The demand for blue moves to the informal economy (it is non-laundered money). “The question is whether this type of black operator thinks the same way as the formal sector and is inclined for pre-election coverage”, doubt the source.
On the other hand, in the market recently say news agencies they stopped updating the blue value minute by minute do it two or three times during the day, which makes them look more abrupt changes during the day.
3. At par with the MEP dollar
The MEP dollar had fallen as low as $386 last week, then started to recover to $398.62 last Friday. In that period the blue had accompanied the ascent from behind and Monday was at hand.
“Blue is a very small marketwhich sooner or later follows the dynamics of financial dollars which, in terms of volume and transparency, reflect where supply and demand are going, despite all the efforts and partial interventions made by the Government”, indicated by the consulting firm Inveq.
4. More pesos per dollar of soybeans
The rise of the blue dollar occurs in a scenario where the Central Bank is observed with a magnifying glass for purchases made since the entry into force of the agricultural dollar, in tandem with monetary issues. According to Massimiliano Donzelli, Head of Research at Invertironline, every dollar you buy means an extra $100 issue.
That is, the difference between what the Central Bank pays producers ($300) and the official exchange rate handed over to importers.
Source: Clarin
