In the midst of a sustained fall, which has already eight consecutive wheels, the dollar receded almost a peso in less than two weeks, depreciating more than 2.49% and reaching values that were not registered for more than three years, the last time that the US currency pierced the floor of 38 pesos.
According to the price of Central Bank of Uruguay (BCU), The dollar is at 38,020 pesos, a distance that contrasts with the beginning of the downward trend, which was 38,992 pesos on June 6, when everything seemed to indicate that it was going to appreciate again above the 39-peso barrier.
With these numbers, the US currency fell back to levels of three years ago. The last time it was this low was on February 17, 2020, when it quoted 37,906 pesos. In addition, it accumulates a significant year-on-year decline of more than 5.11% so far this year and has been below 40 pesos for about five and a half months.
When trying to explain shrinkage, there are several factors to consider. One of them is the appreciation of emerging currencies, a phenomenon that also occurs in other countries, such as the real in Brazil. Added to this is the decision to maintain the interest rates of the United States Federal Reserve (Fed), something that will also contribute to the appreciation of the Uruguayan peso.
To this scenario we must add the improvement in the debt note for Uruguay by the three most important risk rating agencies, such as Standard & Poor’s, Moody’s and fitch. By supporting the course of the country’s economy, it will surely contribute to the appreciation of the local currency.
The impact of the largest investment in Uruguayan history
The investment of 4 billion dollars by the business group Global HIF to build a green hydrogen plant in Paysandu. The expectation is that this disbursement generates an income of dollars and a consequent appreciation of the peso. In fact, the announcement was made on June 8, the day the currency fell back. from 38,954 pesos to 38,903 pesos and deepened its bearish course.
This possibility had been advanced by the financial agency Personal Sherpa, from where they compared the arrival of HIF Global to what happened with UPM in July 2019. At that time, the Finnish company confirmed an investment of $2.7 billion to build its second pulp mill in the country and the US currency fell from the 34,388 pesos to 33,830 pesos in two days, between July 22 and 24 of that year.
From the productive sector they question what they consider an exchange rate delay
Meanwhile, from the productive and agro-export sector they complained about what they consider a exchange rate delay, which was recognized by the Executive. In fact, President Luis Lacalle Pou He pointed out days ago that his government is working to ensure that the dollar remains closer to 39 or 40 pesos, which is the floor that agricultural entities are demanding.
From the Rural Association of Uruguay (ARU) they targeted what they considered a “clear inconsistency” between what was promised by the executive and what was provided by the authorities. Promptly, they charged the BCU and the MEF, considering that they changed “the conditions for the payment of some Treasury Notes in UI (Indexed Units) and UP (Pension Units) maturing in May and June.
With this measure, “those who collect these maturities are prevented from participating in the exchange market and the opportunity to generate an increase in the demand for dollars and upward pressure is lost, which is necessary to improve the country’s competitiveness,” the association questioned. ”. In this regard, they said they would bring “negative consequences for the country’s economy, whose main motor is the agro-exporter”.
Source: Ambito
