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Economic agents correct upward their expectations of the value of the dollar after the rate cut

Economic agents correct upward their expectations of the value of the dollar after the rate cut

The survey by the Central Bank of Uruguay reflected that the market expects a strong monthly rise and the bill would end the year above $40.

Economic agents revised upwards their expectations about the value of the dollar and they expect the exchange rate to close this month at 39 pesos, 2.63% more than the 38 pesos they expected for March, according to the Economic Expectations Survey which is prepared monthly by Central Bank of Uruguay (BCU).

After the 50 basis point drop in the interest rate that he arranged Monetary Policy Committee (Copom), the market incorporated this data into its forecasts, with a notable increase in the short term.

However, the rise in projections moderates as time passes. The median response from analysts contemplates a dollar at 39.70 pesos, an improvement of 0.51% compared to the latest projections.

Meanwhile, they expect the US currency to end the year at 40.20 pesos, just 0.12% higher than the 40.15 pesos they evaluated in the previous survey for the dollar at the end of 2024. However, the responses had a significant range, since they varied between 38 and 43.30 pesos.

The market expects a growth of 3.5%

By focusing on the projections of economic agents with respect to the Gross domestic product (GDP), the median of the responses foresees a growth of 3.5% during 2024, in line with what is projected by the Ministry of Economy and Finance (MEF), although below the 3.7% predicted by the IMF. Meanwhile, for 2025 and 2026, analysts expect GDP to improve by 2.5% in both cases.

It is worth remembering that the GDP grew 2% year-on-year during the last quarter of 2023 and ended 2023 with a growth of 0.4%, thanks to the boost from agricultural sector who left behind the effects of the drought already the launch of UPM 2, which improved pulp sales.

Source: Ambito

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