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The dollar fell again and there is concern about a deepening of the exchange rate delay

The dollar fell again and there is concern about a deepening of the exchange rate delay

He dollar in Uruguay fell again, this time in line with the international scenario, while at the local and global level an adverse path is opening up for the correction of the exchange delay.

He dollar It could not maintain the line of positive movement that barely lasted one day, and it fell again, although only by 0.04% at the close of yesterday’s trading. With a final price of 39,083 pesos, according to the Central Bank of Uruguay (BCU)the US currency remains virtually “ironed” although dangerously close to the range of 38 pesos, in which it has not moved for almost a month.

With this behavior marked by the ups and downs, The greenback has accumulated a decline of 0.21% so far in February; although at an annual level it maintains a positive balance of 0.16%, thanks to the better performance during January. In any case, the price is still far from market expectations that, in the last BCU survey, indicated a dollar to 39.23 by the end of the month.

Internal and external pressures for an exchange rate that does not rebound

In a scenario that is no longer positive for the exchange rate, with the difficulties that it has been demonstrating in being able to adapt to the weeks of appreciation that the dollar At a global level, the coming weeks may be decisive for the situation of exchange delay and loss of competitiveness that the country has been experiencing for more than a year.

In this sense, two factors can further drag the price of the currency: at the local level, the decision to pause interest rate cuts by the BCU; and, at the international level, the cooling of expectations of lower rates by the United States Federal Reserve (Fed).

In the first case, the Monetary Policy Committee (Copom) yesterday resolved to maintain the Monetary Policy Rate (MPR) at the 9% with which it ended 2023. For the exchange rate, this means continuing to have a strong weight, with a cost effectiveness which is four points above inflation — and even three points above the worst perspectives of market agents.

In the second case, the decrease in expectations of future cuts by the Fed – the bets were mostly moved towards June for the first reduction – allowed operators to give a break, while they foresee some stability in the markets. This generated, in principle, that the dollar index fell again, 0.03% to 103.95 units.

For analysts, “it is evident that some of the support of the dollar are a little tired”, and the currency heads to its first weekly drop of 2024. For Uruguay, This may mean further downward pressure for the exchange rate, should it eventually respond more directly to international currency movements.

Source: Ambito

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