On Friday of last week the dollar fell 0.13% compared to Thursday and closed at 39.246 pesos, according to the price of the Central Bank of Uruguay (BCU), so that the US currency interrupted two consecutive rounds of rise; Meanwhile, a rising dollar is expected this week due to the economic consequences of competitiveness that this generates for the country.
With the last day, the dollar It has accumulated a drop of 1.82% so far this month and threatens to “float” after several weeks trading upwards and even touching the 40 peso range. On the other hand, if the behavior of the banknote so far this year is analyzed, the depreciation stretches to 2.06% compared to the end of 2022.
What can happen to the dollar until the end of the year?
Looking ahead to the coming weeks, the behavior of the dollar It is an unknown, although the market anticipated in recent days that it expects the note to close the year at 40.10 pesos.
This is how it emerges from the last BCU Economic Expectations Survey, in which analysts evaluated the dollar at almost 40 pesos from the previous days. However, “the growing problems of competitiveness in the Uruguayan economy” were warned by the Monetary Policy Committee (Copom) during its last meeting, where it defined a cut of 25 basis points in the interest rate.
Another factor to monitor will be the global dollar, which seems weakened in recent weeks, as well as the behavior of the Federal Reserve (Fed) of the United States, after keeping interest rates unchanged.
The concern of the BCU
The monetary authorities view this new weakening of the dollar that, although it accompanies the global trend – in the last 13 days, the dollar index went from 105,780 to 103,499 units -, it harms the competitiveness already damaged of the country.
With this behavior, the US currency is moving away from what the market predicts, which, according to Economic Expectations Survey of the BCU, would close at 40.10 pesos. In November, for its part, the expected value is 39.95 pesos, also far from the current price, which is closer to the range of 38 pesos.
In turn, this happens despite the fact that the Monetary Policy Committee (Copom) recently cut the Monetary Policy Rate (MPR) at 25 basis points; something that, in theory, should have contributed to, at least, supporting the price of dollar in the face of less attractive weight.
In the minutes of the last meeting, published last week, the organization admitted concern about “the significant decline in the real exchange rate and the growing problems of competitiveness in the Uruguayan economy.”
He also referred to the global decline in dollar in recent weeks and attributed it mainly to the fact that United States Federal Reserve (Fed) It kept the interest rate unchanged and “the labor market indicators and the decline in inflation would allow it to begin lowering rates sooner than expected.”
Source: Ambito
