He dollar in Uruguay still fails to establish itself firmly in an uptrend, even after the streak of three days of increases consecutive ones that were interrupted by yesterday’s slight drop. However, the international context seems to begin to turn towards a more favorable scenario for appreciation of the US currency not only globally, but also locally; something that can contribute to a certain correction in the misalignment of the exchange rate or exchange delay.
The first half of the year, and July as well, were marked by the weakening of the dollar at a global level that had its regional correlation in the appreciation of emerging market currencies, with investors who bet on higher risk assets—and, therefore, higher profits against a currency that was progressively losing its appeal. But in August, this trend began to reverse: with the various announcements of the United States Federal Reserve (Fed) on the need to continue with the restrictive monetary policy—and, therefore, with the rise of reference interest rates—the dollar regained some of the lost ground; added to increase in oil pricethe compass appears to be aligning itself toward north again.
There are several signs that the US currency is appreciating and that, in contrast, emerging market currencies that have been unusually strengthened in recent months are beginning to leave high levels of appreciation behind. On the one hand, the Bloomberg Dollar Index (DXY) that compares the dollar with a basket of currencies from advanced countries “has been accumulating several weeks of increases, which would indicate a certain strengthening of the dollar internationally“, as he explained to Ámbito.com Giuliano Cantisani, senior consultant of the Economic Analysis and Forecasting Service in CPA Ferrere.
Likewise, “the meager growth in other advanced economies “It also provides support for a strong dollar.” The most important example in this sense is China, but also the European Union is on the edge of a stagflation. In this sense, “at the international level, the dollar “is acting as a refuge from a more uncertain global macro environment,” he noted. Diego Rodriguez, managing partner of Gastón Bengochea & Cíato this medium.
Also Barclays PLC predicts a “wild race” in local markets, caused by volatility in emerging markets that are beginning to accumulate declines in the stocks of these countries. “In our previous quarterly report we stated that emerging markets were going their own way, but the recent movement of US rates raises doubts about how much they can diverge,” said the British bank, adding that, in addition, the upward turn in oil prices Petroleum “It has become difficult to ignore.”
Deutsche Bank He also announced a bearish outlook for emerging currencies. That is to say, the general forecast is that the currencies that have seen strong appreciation in recent months have already They will not have the same levels of appreciation.
What are the prospects for Uruguay in this new scenario?
The new economic context at a global level has, of course, its correlation at the regional and local level. In the case of Uruguay, just look towards Brazil to understand what can happen in the exchange market: in the northern country, whose real is not only a reference currency for the country but was one of the currencies that strengthened the most in recent months, the dollar recovered value during August, accounting for the Change of trend which has already started.
This can be a positive signal for the country, where The dollar accumulates a decline of 5.49% in the year and claims for loss of competitiveness national are increasingly pressing. In this sense, the strengthening of the peso was explained, mostly, in an accompaniment of the global currency behavior US and in the preference of investors in emerging markets – being a reference currency, the appreciation of the real also influenced the valuation of the peso, even after the cuts of the Monetary Policy Rate (MPR).
The change in trend and the appreciation of dollar internationally it can mean that the exchange rate delay in Uruguay begin to correct itself. It is possible that a first preview of this behavior occurred with the bullish streak of three consecutive days that occurred in the first days of the month, cut by the slight decrease of 0.02% with which the currency closed yesterday. In any case, if the dollar will resume a downward path or, in any case, will remain “ironing” as occurred mostly during August, authorities and analysts will have to look for other explanations, since the global context marks another path.
Likewise, the government must be attentive to a possible revaluation of the dollar and the effects that this could have on inflation control since, as explained by the director of the Center for the Study of Economic and Social Reality (Ceres), Ignacio Munyo, The “ironed” dollar is convenient for the Executive Branch in terms of regulating price increases and maintaining the inflation within the target range.
Source: Ambito
