The main Wall Street banks closely follow the Argentine economy and after the devaluation of the official Dollar, many began to sharpen the pencil and change the forecasts until December 2023.
One of them was the Bank of America. Financial analyst Esteban Monte revealed that the BoFA worsened its forecast for the official exchange rate because net foreign exchange reserves remain in negative territory and the gap with the Dolar blue expanded despite the recent devaluation. Thus, the official dollar stands at $615 and the CCL dollar at $1,076 at the end of 2023. By mid-2024, instead, you see the official dollar at $962 and the CCL dollar at $1,443.
Dollar and inflation: the perspective of JPMorgan
The BoFA is not the only bank of Wall Street that has forecasts to December for Argentina, such is the case for example of the JP Morgan.
The investment bank JP Morgan drew a harsh forecast on the progress of the economy for the remainder of the year, after the result of the Simultaneous and Compulsory Open Primary (PASO) on Sunday, August 13. Higher inflation and the possibility of a new exchange rate jump support the perception that the electoral result configures what he calls the “Milesi earthquake.”
“We revised upwards our forecast for CPI to December 2023 after the adjustment of the official post-STEP exchange rate”, highlighted JP Morgan in a report released to its clients, noting that the projection of annual inflation rose to 190% from a current guideline of 150%.
In this contextJ.P. Morgan sees an increase in the exchange rate arrears, which would force a new increase in the exchange rate before the end of the year. It is that there is a rapid transfer to prices of the recent devaluation, which would trigger a new adjustment of the dollar in the last quarter of the year, and this will feed back into prices.
“The government’s response (after the STEP) was somewhat different from what we expected. In fact, in agreement with the IMF, it opted for a discreet one-time jump of 22% in the official exchange rate,” JP Morgan said. And he added that the measure contributed to barely reduce the currency gap the first day of its application, however, there are expectations of an increase in the coming weeks, in a scenario of “persistent uncertainty regarding economic policy and the electoral result”.
Source: Ambito
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