The American investment bank BCP Securities highlighted the performance of Uruguayan Peso despite recent months in which the dollar has had growth in the exchange market Uruguay. For the financial institution, the national currency “has remained resilient.”
He dollar in Uruguay experience a significant strengthening of the hand of the international financial context but, unlike what is happening in other countries, where the increase in the US currency implies a devaluation of the national currency, the Uruguayan peso has remained strong and remains a trusted asset for investors.
This is what he pointed out Walter Molano, chief emerging markets economist at BCP Securities, in a report for the investment bank’s clients.
The arguments suggest that, although the dollar In the country it seems to have left behind the “ironed” price at 38 pesos – having reached the range of 40 pesos for the first time in the year – and October registered the largest monthly increase since March 2020 with a accumulated positive variation of 3.68%; The US currency is still 0.13% below the value with which it closed 2022.
Likewise, Molano analyzed the additional reduction of 50 basis points made by the Central Bank of Uruguay (BCU) at reference interest rates, taking it to 9.5%. “This decision is aligned with current economic conditions and the inflation objective,” he considered. He also highlighted that in September inflation reached its lowest level in 17 years (3.87%), so, “with declining inflation expectations and one contractionary monetary policy persistent, the Central Bank is on a stable course”, which is also heading towards the “conclusion of its rate reduction cycle”.
This last point allows us to infer the warning that the Uruguayan peso will continue with the current strength levelssince the “price of money” will continue to present interesting returns for investors, while rates will continue to be relatively high.
On the other hand, the chief economist for emerging markets at BCP Securities highlighted that “Uruguay this actively diversifying your income streams with the issuance of offshore (hydrocarbon) resource exploration licenses and investments in green finance, highlighting its commitment to sustainable economic growth”.
“In the midst of these financial events, the nation faced the challenge of a serious water crisis, which it addressed through infrastructure projects and policy measures,” he concluded.
The dollar continues the correction of the exchange rate delay
Meanwhile, in the local exchange market it is observed how the dollar seems aimed at recovering all the lost value during 2023, to the point of having reached a value greater than 40 pesos for the first time this year on November 1st. Although it is still 0.13% below – the last price closed at 40,019 pesos, while on December 30 it was at 40,071 pesos – global signals lead to a greater increase in the coming days.
October, meanwhile, closed with the largest monthly increase since March 2020, rising from “end to end” by 3.68% and representing the most of the recovery of the US currency. In fact, in the last three months, the currency appreciated 6.73%so last month it accounted for just over half of the valuation.
Source: Ambito
