Inflation, excess pesos on the street and political crisis within the government of Alberto Fernández triggered another day of high tension on exchange rates. The blue dollar, which closed at a new all-time high of $423 on Wednesday, has jumped since the start of the round and it reached $440 after noon. Finally, towards the end of the wheel it dropped $8 and ended at $432.
The “crack” within the Government and the rumors of resignations have revived the demand of savers in the parallel market. It was a day of meetings, cross calls and decisions. The Economy Minister, Sergio Massa, and the President of the Central Bank, Miguel Angel Pesce, paraded through the Quinta de Olivos.
At City, someone has indicated that the president is going through the most delicate moment of his management in financial matters. Inflation at 7.7% in March and acceleration recorded in the three weeks of April they encourage the notion that, even above $400, the dollar is “cheap.”
The day was given with high volatility and in many moments ifNo prices on screens. As published clarionOfficials from Sergio Mass’s economic team have put pressure on sites where blue dollar quotes are shown by phone not toor update them “in real time”. Because of this, at various times during the round, the market moved “blind” but with a clear buying bias.
In the last hour of the conference, the tension in the informal market eased. Massa’s team members noted: “Massa Ratification Lowered the Dollar”. After a closed-door meeting between the head of the Palacio de Hacienda and the head of government, a photo of the meeting was released which aimed to dispel fears about a possible departure of the minister.
One way or another, instead of going down, the dollar went up: the blue closed with an increase of 9 dollars, which implies an increase of 8% from Monday, before the crisis erupted that ended with the expulsion of the chief adviser of Alberto Fernández, the former man of business Antonio Aracre.
Financial dollars also rose, to keep pace with the blue, in a market where uncertainty reigns over any attempt at exchange control. Cash with cash increased 1.4% and ended at $435.74 and the MEP dollar was up 3% and was on the verge of $422.
A decision by the Central Bank may have helped to ease prices, at least in part. An hour before the official closure of the market, the agency communicated the decision to raise the interest rate of the Leliqs, the letters that serve as a reference for the economy, by 300 basis points and fixed terms. As of this Thursday, they have continued to produce 81% annually at a nominal level.
The measure was expected by the market, which after the March inflation data of 7.7% released last Friday, took it for granted that the Central Bank would have to tighten its monetary policy. However, City analysts have stressed that the increase reported by the agency on Thursday ‘stood halfway through’
This measure, and an increased liquidation of agriculture, which entered the foreign exchange market for about 173 million dollars, of which USD 71 was part of the “dollar soya 3” program, appear to have helped ease prices at the end of the wheel. The “resurgence” of the farm dollar allowed Central to obtain $44 million for its reserves.
“The BCR’s intention to raise rates is logical, but it seems to have been less than half. The market has estimated an increase of around 500 basis points,” explained financial analyst Salvador Vitelli. “In the midst of this rush, it is difficult to know what effect it may have, it depends on what happens these days. It could bring prices back to current levels, although it depends on the next measures. It seems that the dollar is more political than economic,” he has declared.
In the last 30 days. the price of blue has jumped nearly $50, although the sharp jump has accelerated since last Friday. The pace of the increase worries the Municipality, even if many analysts agree on the fact that even the prices, if inflation is discounted, are far from those that the ticket touched on the street after the race for the peso which led to the expulsion of Martín Guzmán and which, paradoxically, ended with Massa’s arrival at the Ministry of Economy.
Juan Pablo Albornoz, of Inveq, pointed out: “To today’s silver, the dollar at the end of July last year, it would be located at $535. So the July run was a $100+ run. It still doesn’t compare to what’s happening these days. Right now the gap is close to 100% and it hasn’t gone below 140% at that time.”
For Andrés Reschini, of F2 Soluciones Financieras, although we cannot yet speak of a “race”, both moments have points in common: “The jump in the dollar in July 2022 was triggered by a sell-off in sovereign debt and this was an escalation in inflation. In both cases the ministers have lost the little confidence of the market,” he said.
Source: Clarin
