According to a private report, the Multilateral Real Exchange Rate Index would reach an official exchange rate of $326 current pesos.
At the end of October, the Multilateral Real Exchange Rate Index (ITCRM), which compares the evolution of prices expressed in local currency of representative consumer baskets of trading partners, reached its lowest value since 2017. That is, its competitiveness decreased. At the close of October 26, it was positioned at 86.50, according to a private report.
“He Multilateral Real Exchange Rate “it was appreciating at an average daily rate of 0.31% in the last 20 days,” highlighted the Facimex Valores report. The document also noted: “If this dynamic were maintained in the remaining 23 days until Friday, November 17, in the run-up to the ballot, the ITCRM would reach levels consistent with an official exchange rate in $326 at current prices”.
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According to the study, this figure would mark the lowest level since December 16, 2015 ($296 at current prices), the day before the lifting of capital controls implemented by the government of Mauricio Macri (+36% to $403 at current prices).
In the same sense, another market estimate predicts that Massa will reach the runoff with a TCRM approximately 30% lower than Monday POST STEP, in which the decision was made to correct the exchange rate to $350. These are minimum values for Alberto Fernández’s management and 9% above Cristina Kirchner’s mandate.
Multilateral real exchange rate (MRER): what it entails and how it can be solved
For the market, the way to correct this distortion is through a economic plan consistent that calms the passage to prices and the subsequent impact on inflation.
The Secretary of Economic Policy, Gabriel Rubinstein announced that in mid-November the official dollar will slide at a rate of 3% monthly which, with an inflation of less than 10%, would lead to a exchange rate delay to 2015 lows. This delay is relevant for imports that are paid at official dollar but it is more important for him dollar income in a context in which maturities in hard currency and meager exports of the fine harvest are approaching due to the lack of rain for wheat.
Recently, the Rosario Stock Exchange (BCR) adjusted its September forecast for cereal by 5%. Thus, the harvest would go from the 15 million tons projected last month to around 14.3 million today, leaving 700,000 tons on the way.
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Mariano Fuchila
Source: Ambito
