The dollar opens this Monday after having fallen 0.05% this Friday compared to Thursday, according to the price of the Central Bank of Uruguay (BCU), completing the week with a decline and being close to returning to the 38 peso range.
The US currency thus accumulated a loss of 0.19% in the week and the depreciation reached 0.26% in February. However, if its behavior so far this year is analyzed, the dollar It increased 0.11% compared to the end of 2023, as a result of a positive January.
Beyond some ups and downs, the dollar It maintains a flat price so far this year and the market has already taken note of the situation. A reflection of this is that the analysts consulted by the BCU in the Economic Expectations Survey They cut their projections by 0.46% and expect the note to close the month at 39.20 pesos, above the current value.
In moments where the Copom decided to pause the downward cycle of the interest rate, keeping it at 9%, the economist of CPA Ferrere, Giuliano Cantisani, he expressed to Ambit that “no major impacts are expected on the exchange rate” and ventured that “it would maintain relative stability, accumulating a slight depreciation during the year.”
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) resolved last Friday 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
