The dollar in the world falls from its highs of the year (relief for emerging countries)

The dollar in the world falls from its highs of the year (relief for emerging countries)

In November, the dollar index fell 7.2% from 112.8 points to 104.8, where it currently stands, showing the largest monthly drop in the last 10 years. Likewise, from its highs of the year, when it touched 114 points in September, the indicator fell 8.2%.

From Balanz, they point out that the Fed’s monetary policy decision, together with the revision of the projections at its meeting on Wednesday, will dictate the dynamics of the dollar: “The latest data on economic activity showed signs of strength, indicating that the macroeconomic imbalances they continue to be November inflation will be released on Tuesday and is expected to slow to 7.3% annually from 7.7% during October. After this, the Fed’s decision will be known on Wednesday, for which the monetary policy rate is expected to increase by 50 basis points to 4.5%.

Along these lines, they stressed that “by 2023, the dollar will continue to have the support of interest rate differentials in its favor, mainly within developed markets; however, the high dependence on data in monetary policy decisions will bring with it greater volatility for currencies, mainly if inflation in November surprises on the upside”.

Lucas Biagetti, financial analyst at Quaestus Advisory, highlighted: “Since March, the Fed has implemented a process of monetary contraction by raising interest rates on US treasury bonds, this leads investors to look more favorably at rotating towards assets free of risk. The market lived with this dynamic throughout the year, suffering losses in the valuations of financial assets at a general level, and was anticipating it. This migration contributed to a strengthening of the dollar, but these types of policies are usually sustainable only in the short term, considering that for the government to maintain rates at current levels is very costly in terms of spending and finances, added to the fact that States The United States loses competitiveness at the commercial level. What could be observed in recent weeks was greater liquidity at the market level, which contributed to investors reducing their positioning in risk-free assets. This liquidity, which is understood to be sporadic, can certainly be destined for Latin America in the case of investors seeking better compensation in terms of return”.

Regarding the specific case of Argentina, Biagetti considered that “it would not be strange for them to look at the equity of Argentine companies, which have been performing very well, specifically those linked to the energy sector.” Although he clarified that the monetary contraction by the Fed “still has a long way to go, considering that we have not yet reached the terminal rate and, in turn, monetary phenomena do not run at the same speed as the market.”

On this point, Isidro Guardarucci, an economic analyst at FIEL, pointed out: “The devaluation of the dollar in the last month strengthens the devaluation of the Argentine peso with respect to the US currency, in addition to the fact that in recent weeks it has been accelerating a little more. On the other hand, the devaluation of the dollar benefits us in terms of international commitments and in terms of commodities, as long as we have a favorable balance in dollars”.

Source: Ambito

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