The drop in the price of dollar of 1.38%, recorded on post-election Monday in Uruguayis seen by operators as an expected accommodation movement in the market after the failure of the plebiscite of the constitutional reform of social security driven by the PIT-CNT.
On Monday, the dollar fell 1.38%, closing at 40.984 pesos in the interbank price of the Central Bank of Uruguay (BCU) and chaining its second consecutive day of decline. In the month, it accumulates a depreciation of 1.58% and an annual variation of 5.03%, since its price is 1.96 pesos above that registered after the closing of the last exchange day of 2023.
“The peso appreciated as we thought it would. It was reasonable that once this risk factor, which was the social security plebiscitethe currency will appreciate. The aggressiveness with which this appreciation occurs is directly proportional to the strength of the flows,” he explained. Sebastian Arenahead of investment desk Nobilisto Scope.
On Monday, the operations of the exchange market through the Electronic Stock Exchange (Bevsa) was 30 million dollars. “It is relatively normal in terms of volume. And in terms of bond flow, mixed flows of purchases and sales were seen, especially of nominal bonds in pesos at a fixed rate 2031, 2033, but no marked flow,” he added.
In tune, Francisco Echegoyenhead of table Gastón Bengochea Stock Broker, He linked the downward movement in the price of the dollar to the signs of calm that the market and investors received with the rejection of the social security plebiscite.
He dollar had made a significant jump in its price in mid-September due to the uncertainty generated by the reform proposal. Then it broke the 42 peso barrier and although it later fell to stabilize in the center of the 41 peso range, operators now expect another correction.
“The result of the plebiscite has dissipated, there will be no constitutional change in the direction of social security and, therefore, the dollar “It returns a little to the level it is supposed to be at and it will be looking for its new point of balance all these days, based more on the fundamentals than on exogenous elements that are political in nature,” he considered. Angel Urraburupresident of the Montevideo Stock Exchange (BVM).
What to expect from the dollar in the coming weeks?
He dollar faces crucial weeks ahead both globally and locally, with the focus primarily on USA.
Urraburu stated to Scope that “from today on, we are going to evaluate the dollar based on the elements that we always think about: fiscal deficitinterest paid by monetary regulation bills (LRM), what is happening internationally with interest rates in the United States.” “Let us not forget that the Federal Reserve (Fed) It meets in the first days of November and next week there are elections in the United States,” he noted.
“I don’t think the balance point of dollar be the initial one, before the increase linked to the plebiscite, but it will be between 40 and 41 pesos in the next 30 days,” he projected.
Arena pointed out that in the coming days the behavior of the dollar will depend a lot on the flow of bonds in local currency, both those tied to inflation and bonds in nominal peso. “We will have to see if new buyers emerge in the market, given that this risk factor is mitigated, see if that triggers new purchases by real money funds or, on the contrary, what actually happens is that many take advantage to take profits and exit at levels that are close to 9.20-9.25”.
“Until yesterday long nominal bonds were operating around that rate. Let us remember that these long nominal bonds at the worst moment of the sell off, a few weeks ago, were close to 10.5. “In the next few days we will see how the flow of funds from abroad behaves and, based on that, how the currency moves,” he added.
Source: Ambito
