The beginning of the month of October was auspicious for the sectors of the economy that are demanding measures from the government to influence the exchange rate priceafter the US currency strengthened against the Uruguayan peso for five consecutive exchange sessions.
The quote of dollar It grew by 2.70% so far in October as a result of this bullish rally, and ended up taking the greenback into the range of 39 pesos last Friday the 6th, when it reached 39,596 pesos per unit. The currency had already entered this range on Tuesday the 3rd, but its resistance within it was uncertain heading into the weekend.
After painting the entire week green, the bullish variations of the dollar captured all the attention of the export sectors, who have been claiming for months that this “cheap” exchange rate is hitting the market squarely. competitiveness of Uruguayan placements.
He dollar is strengthening globally after the latest changes in monetary policy by USAwhere interest rates will be set higher than expected in order to contain inflation, a factor that seems to be affecting the local market.
The Central Bank cut the MPR by 0.50%
On Thursday, October 5, within the framework of the contractionary monetary policy carried out by the Uruguayan government, the Central Bank of Uruguay (BCU) cut 50 basis points, the Monetary Policy Rate (MPR)which stood at 9.50%.
A measure motivated by a Consumer Price Index (CPI) which fell again on a year-on-year basis in September and stood at 3.87%, reaching its lowest level since 2005.
However, if interest rates in dollars remain at high levels or rise, there could be a tendency to demand a higher rate in pesos.
Future outlook for the dollar and peso instruments
Likewise, the consecutive increases reopened the debate on the profitability of the Indexed Units (UI) and instruments in pesos.
Here the outlook is uncertain, if it continues with its bullish rally, the dollar could reverse its performance as a reserve of value compared to financial instruments indexed to inflation.
However, the greenback is likely to hit its ceiling at 40 pesos in the coming days, taking into account that the current price behavior could be due to a small upward correction after a few months of sustained decline.
The Uruguayan site specialized in personal finances, Sherpa Staffassured that “in this situation, certain rotation between assets in nominal weights or UI and dollars makes sense”, but that assets in nominal pesos or UI continue to be a good option for those who want to guarantee a certain level of consumption, without seeking financial speculation.
At the same time, it is noted that “in the end, rate arbitrage should operate,” since if an investment in dollars increasingly pays more, one in nominal pesos “should follow the trend.”
Source: Ambito
