In fact, safe-haven assets strengthened after Russian President V. Putin announced that he will recognize the independence of Donetsk and Luhansk amid growing speculation of an ultimate invasion of the country anytime soon. The safe-haven appeal of the US dollar remains strong following the strong resurgence of risk aversion, always underpinned by growing uncertainty surrounding the military conflict between Russia and Ukraine.
In this framework, for analysts, the US dollar may rise further because of investors’ need to hedge in safe haven assets such as the dollar and gold.
And at the local level?
With the rise of the dollar, there would also be a jump in the purchase of US treasury bonds, which would imply a significant outflow of capital from emerging markets. Something that, of course, would affect our country, which is on a path to seek investment. The other face of the revaluation of the dollar, without a doubt, would be a general drop in the price of commodities.
In the first place, the increase in the price of energy (as is already being observed in gas and oil) would have a negative effect, since Argentina has not yet achieved energy sovereignty. Argentina is a net importer, which puts it in a weak position due to the increase in the price of liquefied gas. However, this impact could be mitigated by the increase in other commodities associated with the conflict, such as wheat, of which Russia and Ukraine are the main producers.
For analysts, the impact can also be seen in exports. The economic sanctions of the “allies” on Russia will affect the currency and if it is devalued, it could affect Argentine exports since it is one of Argentina’s marketing destinations.
Source: Ambito
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