Blue dollar: how the decision to maintain the fixed term rate affects that market

The price of the blue dollar closed on Friday at $492, after a strong drop that was registered on Thursday, June 15 and that took it to $487, it jumped $5 in one day. June is usually a key month for the illegal exchange rate market, which tends to fall at the beginning of the month due to the sale of foreign currency to pay bonuses by employers and then, in the second half, tends to rise because many workers go to that plaza with their extra pesos to dollarize them. But this year, a novelty is added to the seasonal variables and it is the fact that the Central Bank (BCRA) confirmed, as expected by the market, that it will not modify the rates of the traditional fixed term after the inflation data for May. And the market analyzes how this affects the dynamics of the blue dollar.

Let us remember that the BCRA ordered last Thursday that, in view of the slight deceleration of inflation that was seen in May, when it was 7.8%, against the 8.4% registered the previous month, it would maintain the yield index of the traditional fixed term at 97% (nominal annual rate, TNA), with an effective rate for the year (TEA) of 154% and 8% for the month. The measure was expected by the market given that, after the data from the Consumer Price Index (CPI), it had been left with a real positive yield of 0.2 percentage points compared to last month’s data.

“From slightly negative rates (8% monthly yield against 8.4% inflation in April) we move to slightly positive rates now”, describes the director of MyR Asesores, the economist Fabio Rodríguez, in dialogue with Ámbito.

Blue dollar: how the fixed term rate affects

This policy seeks to keep savers in pesos and thus avoid the dollarization of portfolios that usually occurs in electoral contexts. And it is that, as explained by the economist from the University of Avellaneda Pablo Ferrari “the CPI for May indicates that a traditional fixed term now has a positive real rate and is an incentive to keep a small saving in pesos”.

In the words of capital market economist Christian Buteler: “Maintaining the rate in the face of inflation that has slowed improves the condition for those who remain in pesos because it allows them to have a profit and that would prevent people from turning massively to the dollar, in principle.”

However, some analysts in the City believe that with two months to go until the elections, portfolios are looking for future returns, so this return may not be enough to avoid dollarization. In this sense, Ferrari warns that “not all savers are comparing rates on a permanent basis nor do they reason everything in the short term and it may seem to many that having dollars is always a good precautionary measure.”

Thus, Gustavo Quintana, from PR Operadores de Cambio, points out that, “for now, I don’t think the measure will have a direct impact on the blue,” but warns that it is an important variable for that dollar market and points out that “a negative rate against inflation stimulates the search for other investment alternatives, among them, dollarization”.

The MEP dollar: a key element for the blue

At this point, Buteler maintains that, taking this variable into account, beyond the rate, the result of what happens in the MEP dollar market will be key to the dynamics of the blue. He explains that, at this time, since the BCRA is intervening Through the purchase and sale of bonds in that market, that stock exchange rate is cheaper than the blue one and that stimulates its purchase and, on the other hand, if some investors decide to mash and sell it in the illegal one to make a difference with the exchange rate gap, helps to put downward pressure or counteract the upward trend of the informal.

Consequently, Rodríguez explains that, although the inflation record gave room for a pause in the dynamic of interest increases that the BCRA had been carrying out, going forward, “The regulator will not only have to look at inflation to define its rate policy, but it will also have to pay attention to exchange rate dynamics, as a key variable in the face of a possible greater force in the change in portfolios and dollarization of financial assets in the face of to the August elections.

Thus, the BCRA rate policy could have a slightly positive effect in the coming days on the Dolar bluebut the dollarization force in a pre-election scenario could predominate even despite the positive returns of the traditional fixed term.

This forces him to think, going forward, of the need to look especially at the gap between the blue and the MEP with special awareness of the dollarization appetite that could turn to the blue if that exchange rate and the fixed-term yields do not maintain a level interesting attraction.