The near future of dollar It is the topic that generates the most expectations in the current economic situation of Uruguay, after he Central Bank (BCU) decided to cut 0.5% in interest rates reference as a “signal” to calm the heated spirits of the sectors exporters in the face of the exchange rate delay and the loss of constant competitiveness. Can the US currency be expected to rise due to this measure?
He dollar closed its second week on the rise in the midst of some busy days in terms of exchange rate expectations, and seems to begin to follow a path more aligned with what exporters expect: on Friday it rose 0.32% compared to Thursday and closed at 38,788 pesos , approaching the range of 39 pesos. Although he agro They do not intend a price lower than 45 pesos, this positive behavior is already good news, considering that March was marked by the devaluation of the greenback against the peso.
In that sense, the US currency rose 0.69% in the week, while so far in April it has accumulated a appreciation of 3.29%. This reduces the decline for the year to 0.6%.
Can the uptrend continue?
The truth is that, beyond the noise generated by the cut in the Monetary Policy Rate (MPR) on the part of the BCU, the appreciation of the dollar during the week was not necessarily due to a response from local exchange market to the decision of monetary politics. But, rather, to a coupling effect of the international market and the movements of the US currency globally.
In this regard, the greenback reached its biggest weekly rise since September 2022, driven by the certainty that the Federal Reserve (Fed) will not lower, in the short term, interest rates that are at their highest historical range. In this way, the dollar index —which measures the greenback in relation to a basket of six other international currencies— stood at 106.02 units, above its record from the previous day; and the weekly advance exceeded 1.6%, a behavior that also impacted local prices.
This is important to take into account since, if the trend continues in USA —higher-than-expected inflation and postponement of lowering rates—, the dollar will continue to have good returns internationally and, therefore, will continue to be chosen by investors for their placements, which supports its price. Consequently, the international monetary context is favorable to an appreciation also in Uruguay —important if you remember that the decline in the currency at the local level during 2023 was almost the same as at the global level in that same year.
The impact of the drop in the MPR can also be significant on the Uruguayan exchange rate. However, we must not make the mistake of exclusively relating the price of the dollar at the level of the reference interest rates set by the BCU, as the president of the BCU warned. Montevideo Stock Exchange, Angel Urraburu, on Radio Carve.
“It is one of the elements that influences but perhaps there are others that influence many more,” considered the financial analyst. In this regard, one can mention, for example, this situation of the monetary policy of the Fed and its influence on the price of the dollar at a global level or, at the local level, the behavior of the inflation, which may present a rebound and require specific measures to control it.
Likewise, other international factors that are beyond the monetary policy decisions of the BCU that can impact the value of the US currency are the current geopolitical conflicts, especially the war between Israel and Hamas in Loop, as well as the increase in tensions with Iran, which could generate a rise in the oil price and, therefore, energy; leading, consequently, to an increase in inflation.
“Let’s see what happens, so far we see a market aligned with what is happening in other emerging countries, with what is happening with the dollar in the world and in the country that issues the dollar.” dollar, United States,” said Urraburu. “That simplism or simplicity with which the incidence or relationship between the dollar and the interest rate It doesn’t leave me very comfortable. “If it influences well, other factors influence it much more,” she concluded.
Source: Ambito
