Blue dollar at $ 270: why it falls and what the floor can be

The foreign exchange market moves according to expectations. A combination of factors helped this Monday, in the first round of the week, the parallel dollar moved sharply to the downside.

The blue price has collapsed: lost $ 15 in one day settle at $ 270, a price he hadn’t seen since before Martín Guzmán’s departure from the government.

Among all the reasons traders can find for this fall, the announcement of a dollar differential for soybean producersat $ 200 for this month, It is undoubtedly the heaviest.

Before his trip to Washington and pressed by the low level of reserves, Massa carried out a “voluntary membership” operation which in the practice improves by almost 40% the price to the men of the camp to liquidate their cereals.

But there were other reasons behind this decline in dollarization demand. This was warned by some foreign exchange market participants the unexpected holiday last Friday, decided by president Alberto Fernández after the attack on his vice president, “dried up “the plaza de pesos and that, added to the beginning of the month and the obligations of the companies, meant that he was there less interest on the greenback.

However, beyond this specific fact, many agree on the fact Massa’s announcement served to dispel fears of devaluation, at least in the short term, and this will be the key to a normalization of the exchange rate gap, which this Monday for the first time in weeks managed to break the 100% barrier.

For Juan Manuel Pazos, of TPCG Valores, the narrowing of the gap coincides with a change in expectations. “It is closely related to the prospect that the Central Bank accumulates a generous number of reserves in the coming weeks “said the economist before the consultation of Clarione.

Pazos explained that “the gap is the product of three things: the excess of pesos, the tightening of capital controls and the expectation that the Central Bank will run out of reserves. The action of the Government from the assumption of Massa acts in 3 directions. The control panel has stopped transmitting. The soybean dollar would support the reserve position and, therefore, the risk of tighter controls is diluted. ”

In this line, his colleague Juan Pablo Albornoz, from Ecolatina, underlined: “The new operation is easier to understand and (for now) does not prevent the financial dollar from working. The very strong rate hike and the expectation that it will continue to rise plays in favor of a calm on free dollars. This improves the yield to the producer not only via the exchange rate, but also via a lower cost of the gap to re-dollarize its production “.

The decline in financial dollars was also sustained: both in the first three rounds of September the MEP counted with liquidity back of 4.3% and 4.2% respectively.

“Although financial dollars were at very high levels, the gap remained relatively stable. Raise rates to (e another new upload is expected), very short-term expectations did not appear to mark a new rise in financial dollars (unlike when the previous soybean dollar was announced), “explained Albornoz.

“This improves the performance of those who liquidate not only through the price, but also through the cost of re-dollarization of the product (I sell soybeans, I get pesos after deductions now at a higher exchange rate, I turn around and buy MEP or CCL dollars now at a lower price, improve my received in dollars in total)”, She said.

The question now is whether this narrowing of the gap can extend beyond the immediate market reaction. In this regard, Pazos stated: “It depends on how many dollars the plant manages to accumulate this month and, above all, how much is the liquidation of exports from October to December. If after September 30 the offer runs out, towards the end of the year We will have tensions again. “

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