The blue dollar at $420: the reasons for the jump and what is its short-term ceiling

The blue dollar started the week with a strong rise and reached $420 for the first time in the City. This is the highest daily jump recorded in a month. Nothing less than $20 in just two days. Analysts look for the causes in the situation and try to anticipate whether or not the illegal exchange rate could have a ceiling these days.

Lucio Garay MendezEcoGo economist, observes in dialogue with Ambit that, little by little, “The lack of dollars due to the drought is beginning to spread and the greater importance of this news generates a search for coverage against the dollar.” He explains that this is pushing the parallel exchange rates upwards (in fact, Cash With Liquid jumped sharply this Monday as well) and maintains that “That is accentuated in an electoral year and it is seen more clearly at this time, in which the provincial elections have already begun.”

In that context, Andrés Reschini, F2 Soluciones Financieras analyst, points out that “What happens is that the peso continues to fall”and explains that, on Friday, when the Consumer Price Index (CPI) data for March was released, the market understood that the rate was even further away in real terms.

Waiting for rate hikes

This, according to the analyst, given the lack of response from the Central Bank (BCRA)causes many investors, the agents, dissatisfied with the performance of the current rate, to seek refuge in alternative dollars, even, many, waiting for news in this regard and before deciding whether or not to renew their fixed terms, so as not to lose the benefit of an eventual rise.

These elements, added to the new changes that were implemented for the dollar Cash with Settlement (CCL) in recent times, mean that, as described by the chief economist of Delphos Investments, Jorge Neyro, “the blue is reawakening after a few days of calm below $400”.

However, he is of the opinion that this exchange rate continues to be relatively lagging behind the evolution of inflation, since, “in recent months, the prices of the economy have risen, so far this year, more than the dollar”.

Is there a ceiling for the blue dollar?

Thus, the big question is whether the blue dollar has a ceiling and what could be that maximum value that it could reach. Currently, the gap is above 90% and everything would indicate that it could rise in a context of crisis. But to what level? Garay Méndez mentions that, “so far in this last stock, whenever the gap touched 130/160% it went down again, but, at times of overshooting, it touched approximately those values.”

Meanwhile, to this question, Reschini responds that “it is very difficult to put ceilings and floors”, but points out that some models that take into account the stock of pesos, the value of the CCL (which is usually very close to the blue), the range between $450 and $500but clarifies that these numbers would be expected “in a market stress scenario”, which is not what is happening at the moment.

The analyst considers that we are not in that type of context now and points out that, if this situation occurs, the price of Dolar blue it could be even bigger. “Let’s keep in mind that for the informal equate to inflation, only so far in 2023, it should be worth approximately $480″, he details. However, he clarifies that this is not calculated based on floors or ceilings, but rather they are models and none is perfect, because nobody knows what value can set the demand as a ceiling.

In the same sense, Neyro observes that prices are winning the race for the moment, so he agrees that could go up to $450 in the short or medium term.