He exchange market is expectant this Thursday awaiting the announcement on the interest rate of the Central Bank of Uruguay (BCU) and with the price of dollar recovering ground after a month of June that closed in red and at the limit of 37 pesos.
On Wednesday, the US currency scored the highest rise for an exchange day of the last five months. The BCU interbank closed at 37.89 pesos, which implies an increase of 1.07% compared to the previous day.
The numbers for the first days of July are encouraging: the dollar has appreciated 1.3% so far this week. Analysts expect the strong drop in June to be corrected during the month, which is historically a period with a downward price.
Added to this is a key factor: the possible drop in the interest rate that the BCU would announce today and that it could even be 50 basis points as a result of the good inflation data in June, which was lower than expected (-0.46%) and brought the annualized indicator within the government’s target range, standing at 5.98%.
The main productive sectors of the country see in the contractive policy that I held the BCU the main reason for the weight appreciation, a factor that has damaged Uruguayan competitiveness. As instruments in pesos are so attractive, the US currency accumulates a depreciation of 5.43% so far in 2023.
The Central Bank published last week the Real Effective Exchange Rate Index (TCRE) corresponding to May, which registered a drop of 7.1% year-on-year. This setback implies 15 consecutive months of loss of competitiveness in the annual comparison, while the last increase occurred in February 2022, when it improved by 3.1% compared to the previous year.
The market had lowered its projections for the exchange rate in the last Economic Expectations Survey and expects that, for the current year, the dollar will close at 39.97 pesos on average, which would imply an increase of more than 5% by the end of the calendar year, when previously they expected it to close 2023 at 41 pesos.
Source: Ambito
