Does history repeat itself? Blue Dollar Soars Over $20 After Inflation Data

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The blue dollar is up nearly $20 since Friday and is reached at $490. Financial dollars, despite all the interventions and controls put in place in the last 20 days, are heating up again and both liquid cash and the “shielded” MEP dollar have advanced since the beginning of the week. What happened?

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With no dollars in sight and inflation setting new records every month, Argentina seems to be living in its “groundhog day”. Last month, when March inflation data came out, which had been 7.7%, the market’s immediate reaction was a race against the peso, which led the blue dollar to flirt with the $500 and Minister Sergio Massa to take “desperate measures”.

This month, in light of a 8.4% accumulated in Aprilthe minister got ready, last Saturday he held a meeting with his economic cabinet and made a statement the announcement of a package of measures so that when the foreign exchange market reopens this Monday, the damage will not be so great.

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But of the at least nine measures announced from his portfolio on Sunday morning, Until noon on Tuesday, only two: the Central Bank’s rate hike and the increase in reimbursement for debit card purchases in the most vulnerable sectors, Thus, and with all the artillery put in place so that the financial market does not trigger the gap, the blue dollar has responded with lift

Between Monday and Tuesday accumulate a raise of almost $20, to go from the $474 it closed at on Friday to the $490 it sold for this morning in the City. At the opening it even traded at 495 dollars, just two pesos below its nominal all-time high, reached just under a month ago.

Thus, despite the fact that the Central Bank has validated, this time in a more rapid manner, a rise in rates that brings fixed-term yields to 155% effective per annum, savers prefer to seek cover in the greenback. Is that with this increase, the yield of making a 30-day placement in a bank is around 8% and is still lower than past inflation (8.4%) and the level expected by municipal consultancies for May .

The market was not convinced by the rate hike nor by the fact that the Central Bank, Even though it bought dollars again yesterday, it once again slowed the daily rate of devaluation. On Sunday, sources at the Palacio de Hacienda announced that the BCRA would raise its foreign exchange intervention rate and “manage the crawling peg rate.”

On Monday, contrary to what the market expected, which was an acceleration of the daily rate of devaluation to bring it closer to the level of monthly inflation, the money desk of the Central held back again. With a $1.50 increase in the wholesale dollar, it validated an increase that, on a monthly basis, falls short of 6%.

Economist Fernando Marull underlined: “With no more tools, since the beginning of May the BCRA has been trying to compensate for inflationary pressure by delaying the officialization of the dollar. A strategy, which with the CEPO exchange rate through and the parallel movement of the dollar, does not it’s going to have a big impact.”

Meanwhile, consultancy Aurum Valores warned: “The real multilateral exchange rate remains well below the levels that were tested at the end of 2021, and well below the levels that were seen in the first half of the government of Alberto Fernández (until STEP 2021). The exchange lag is consolidated with the devaluation rates which remain well below the inflation rate, despite the help offered by the strengthening of the real”.


Source: Clarin

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