The US currency is recovering the value lost during the year. Expectation in the markets for the Fed’s decision on rates.
He dollar in Uruguay seems to have resumed its bullish rally or, at least, the course of correction of exchange delay which it maintained throughout the first half of October, and is close to closing a significantly positive month at very few cents from the 40 peso range.
He dollar continues to try to recover the value it had at the beginning of the year, and is just 0.30% away from closing the gap of the accumulated decline of this 2023. With the slight increase that it registered yesterday, of 0.07%, the US currency was quoted to 39,952 pesosaccording to data from Central Bank of Uruguay (BCU). And although there still seem to be too many cents left to rise—considering the small movements it has shown in recent days, both upwards and downwards—the chances of it breaking the ceiling of 40 pesos are not non-existent.
In this way, the dollar has a positive variation of 3.62% so far this month, with just one exchange day left to be able to talk about the end-to-end quote, and there is no doubt that it will be the best month so far this year. Definitely good news for the sectors exporters that, although they understand that the currency continues to lag behind the value it should have to improve the competitiveness Uruguay, at least they will have a reference currency at the same value with which it closed 2022.
Likewise, it is worth remembering that, currently, the US currency is not far from the expectations of the analysts and entities consulted by the BCU. In fact, the current price is barely above, since projections indicated a dollar at 39.71 pesos for the end of October. In December, meanwhile, the price should be 40 pesos.
The markets, waiting for what will happen with rates
Meanwhile, investors are beginning to adjust to the idea that interest rates around the world will remain high; among them, those of the United States. Therefore, the dollar is established as a safe and profitable investment alternative.
In this sense, the bond yield of the Treasure 10 years have risen around 31 basis points so far this month; in the preview, in addition, of a new definition of what will happen to the reference interest rates by the Federal Reserve (Fed).
The possibility that the US central bank will raise rates before the end of the year – and thereby support dollar yields – is also contemplated by the BCU in its Monetary Policy Report (IPoM) corresponding to the third quarter. There, the authorities considered that “the statements of the president of the Fed, Jerome Powell and other officials of the organization suggest an additional increase “before the end of the year”, after the increase in July and the decision to maintain the level of rates in September.
Therefore, in that sense, one could also expect the strengthening of the dollar globally and, therefore, its correlation at the local level.
Source: Ambito
