He dollar in Uruguay fell again, in line with the international scenario in which expectations of a soon rate cut in USA. Again in the range of 38 pesos, the exchange rate delay continues to be a concern during a year in which analysts do not foresee strength for the foreign currency.
It didn’t last long dollar in positive territory when, after just one day of recovery in the range of 39 pesos and with a cumulative positive of 0.03%, the US currency fell again, this time by 0.23%. In this way, and according to the official quote of the Central Bank of Uruguay (BCU)closed at 38,962 pesos, below the value of two days ago, before the two consecutive increases.
With this behavior, the greenback accumulates, once again, a negative result so far in March, with a decline of 0.22% in just four exchange days; while in the year it already falls 0.15%, completely reversing what was recovered during January —even despite the fall in February.
Meanwhile, the exchange delay, hand in hand with loss of competitiveness, continues to be one of the main points of concern for the country’s productive and export sectors. As explained by the president of the Rural Association of Uruguay (ARU), Patricio Cortabarríato Ambit, This situation “continues to be the main eroder of the economic results of companies.”
For the rural businessman, “the fiscal deficit, More than 2,000 million dollars that enter our economy to pay State costs, end up generating a significant drop in the exchange rate. “This affects the entire export sector, not just agriculture, the entire export sector.”
A day of decline for the global dollar after the testimony of the Fed
The global dollar also had an unusual – but expected – collapse in a week marked by the stability in the currency, typical of the caution of operators in the face of several days with key information.
In that sense, yesterday the president of the Federal Reserve (Fed), Jerome Powellgave his testimony in front of the Congress and announced that inflation control “is not assured” and that cuts in reference interest rates—at a historic high for months—“will really depend on the direction of the economy,” mainly in terms of price control. .
“Our focus is on maximum employment and price stability, and incoming data that affects the outlook, and those are the things we will be looking at,” Powell said in prepared remarks before the House Financial Services Committee.
And he assured that at Fed “would like to see more data that confirms and makes us feel more confident that inflation is sustainably coming down to 2%” before reducing the interest rate.
This confirmation that the first cuts will not occur until almost the second semester, in the best of cases, did not mean news, since it is what since the Fed have been holding in recent times. However, the pessimism of the operators – supported by less favorable than expected economic data – led to the collapse of the dollar index, which fell 0.41% to 103.36 units.
Meanwhile, in Uruguay, this new scenario of weakness of the global dollar It can be especially negative for the exchange rate, which is already affected by local conditions of excess supply due to the inflow of foreign currency through the foreign direct investment (FDI) and strengthening of the peso due to high interest rates at the local level.
Source: Ambito
