The volatility of the dollar revived the debate in the City about the “equilibrium price” for the end of the year

In recent weeks, The dollar “woke up” Before various political scandals, the proximity to the legislative elections and monetary management of the Central Bank. In this context, he revived the debate on What would be the “equilibrium price” of the currency for the end of the year.

After comfortably exceeding the $ 1,250 barrier in July, the dollar Officer began to grow until it reached a peak of $ 1,380 at the end of that month. Subsequently, the parity cooled, but continued in the range of $ 1,300. And now, Ring around $ 1,375 again under the tutelage of the official intervention.

Why the dollar volatility increases

The pressure on the dollar responds to a Combination of factors that were enhanced simultaneously. First, the LEFIS DISASSEMBLY He injected more than $ 15 billion into the market and generated an excess of pesos. To this was added the Seasonal demand of foreign exchange associated with the payment of bonuses and the expenses for vacations, together with the so -called “electoral trace”: the preventive dollarization of investors looking Coverage in the face of the uncertainty of the October elections.

In front of this scenario, The Treasury and the Central Bank tried to contain the exchange tension Through an increase in bank lace, a rise in interest rates and a hardening of monetary policy. However, the strong demand for coverage persisted and ended up forcing a change in strategy. Therefore, the Ministry of Economy enabled direct interventions with the aim of moderating volatility and stop the escalation.

Given the situation, the market began to evaluate What would be a “fair price” of the dollar so that all the parties involved in the Argentine economy are “satisfied”since a very cheap dollar for government intervention could unbalance the commercial balance again, while a very high impact on inflation and, therefore, on economic growth.

Monetary policy, elections and more

Unfortunately, the conclusion is that There is no exact level that can be achieved, or at least project, given the countless variables that affect exchange dynamics.

“Actually, the concept of fair price is an illusion. From medieval scholasticism until today, it was tried to define it, but, as Friedrich Hayek explained, the only price that we can consider fair is the free price, that is, the one that arises from the interaction of millions of bidders and plaintiffs in an open and competitive market. The price is not a moral value, but a signal system that coordinates the decisions of producers and consumers. We try to set a fair price administratively, distort those signs and generate scarcity, parallel markets and corruption, “he said Agustín EtchebarneGeneral Director of the Freedom and Progress Foundation (LYP).

“In the case of the dollar, talk about a price or high or low is to ignore that Its value depends on multiple variables: fiscal policy, monetary, inflation expectations and government confidence. If the Central Bank ceases to intervene artificially, the market will find that equilibrium price. It can be uncomfortable in the short term, but it is the only way to restore credibility and attract investments, “he added.

For its part, Claudio Capraulodirector of the Analytica consultancy, said that, although “there is no exact answer”, because it agreed that it depends on many factors, The dollar should be located at a level “that allows the BCRA to gradually begin to accumulate reserves”.

According to the expert, to fulfill the new reservations goal, The Government must accumulate US $ 3,500 million until the end of the year. “In parallel, the Treasury has in the BCRA of just US $ 2,011 million, while facing maturities for US $ 790 million with the IMF in November and for US $ 4,300 million with private creditors in January 2026”.