The foreign exchange market surprised last week a 12.6% drop in the dollar predicts liquidationwhich dragged down both the rest of the parallel prices and the expectations of devaluation in the futures market.
In the City they believe that with this new decline in the exchange rate gap, that has once again exceeded the 40% threshold to position itself at 33% levels, The government’s plan is taking off again, although these days there is debate as to whether the financial dollar will have found a firm footing in the market $1,112 with which it ended on Friday.
Measured in real terms, cash with settlement, which, as market specialists have stated, has been highly appreciated taking into account the level of the burden of the economy over the past two months, It is back to the lows it hasn’t seen since before the pandemic in 2020.
Several factors were linked for prices to witness this collapse. On the one hand, the government, after the Congressional setback on the Omnibus law the previous week, managed to some “small victories” on the economic frontsuch as the confirmation that inflation is starting to decrease after the post-devaluation wave of December, the consolidation of the Central Bank as a buyer of dollars in the Single and Free Trade Market, despite the greater inflow of the private sector, the good nature of the tenders Central and Treasury contracts and the financial surplus communicated on Friday by Minister Luis Caputo.
On the other hand, the monetary tightening has drained citizens’ pockets and businesses’ margins. In Consultatio they explained: “The slowdown in economic activity could lead companies to liquidate dollar positions – today it becomes evident that the market was overbought due to the expectation of earlydollarization – to finance working capital with peso costs that continue to rise.”
“The decline in real income also explains the appreciation of the blue dollar families who resort to selling dollars to finance expenses“added the fund manager.
Forward, The market remains cautious about what the dynamics of the financial dollar may be. On the one hand, the recent statements of Javier Milei, who reiterated in several public appearances that thedollarization plan is still underway, could revive demand in the parallel market. On the other hand, many of the factors that forced the price decline appear to be temporary and the market will test their sustainability in the short to medium term.
“In the current pattern of fiscal consolidation, negative real rates and capital controls, financial dollars relatively quickly reflect the volatility of local and international expectations. Recall that in December the exchange rate gap fell below 20% and then rise again to 60% will fall below 35%” on Friday, they indicated in Delphos.
For their part, GMA Capital stated: “We opt for prudence. It is impossible to tame high inflation without the presence of a structural plan. For urgent issues, the “chainsaw”, the “blender” and the lion trap could be effective mechanisms, even if they are far from being the guarantors of a healthy, thriving economy open to the world. For the important thing, which I am the fundamental reforms to unblock the productive forces, “Negotiations in Congress, currently bogged down, must be resumed.”
Both the fact that the CCL has reached a four-year real level, and inflation, which, although starting to decelerate, remains persistently high, accompanied by real rates that remain strongly negative, may cause the price “turn around” and take a new leap.
The market seems to believe that Santiago Bausili’s Central Bank will maintain the model of devaluing the official exchange rate at 2% monthly, and this is reflected in the decline in prices of futures contracts. However, carefully follow the signals that the central banker and his team give on monetary policy and the tools to implement it. The organization has committed to the IMF to submit it by April 30.
Source: Clarin
