The blue dollar fell sharply: the reasons for the collapse and what lies ahead

The blue dollar ends a week in which Its price fell $20 and closed at $710 this Friday, about $700 which surpassed two days after the primary elections. From that moment on, she was involved in a process of rise that seemed unstoppable, what is known as a process of overshooting, or overreaction, which led him to reach $795 in one day. Then, stabilized around $730 for a few days, but this week it started to go down. Why did this dynamic occur and how will it continue?

It should be remembered that the Central Bank (BCRA) implemented a 22% devaluation of the weight and carried the official exchange rate up to $350, a price that will remain fixed until next November. Clearly, the measures of a surprise devaluation which were taken on Monday after primary elections generated a price jump (perhaps exaggerated) of the informal exchange rate.

However, then stabilized and this week down $20even this Friday, September 8 It reached $705. Many analysts wonder if $700 is a floor and whether its value could continue to fall.

Is there a floor for the blue dollar?

As the economist says Christian Butler“it is very difficult to put a price on Dolar blue“, but recognizes that that illegal exchange rate It has room to continue going down. And it explains that reached a very high value a few days ago, so it was expected that it would begin to drop at some point.

Buteler indicates that, to talk about this price drop, first It is necessary to mention the strong previous rise. “The $800 was a very expensive value for him Dolar blue and the current price is still high, so I think has room to continue going down, even falling below $700. However, we must keep in mind that we are in a electoral context and a lot of uncertainty, which can put a stop to the fall”, he details.

Thus, he explains that, from numbers and fundamentals, It is expected that the blue could reach $700, but, he warns that, “from the expectations of the candidates and what they say, we have to see if this is the case.” It happens that, as is public knowledge, at this moment, there is a lot of turbulence and that threatens the drop in price that should occur naturally after the overshooting which starred the illegal dollar.

Blue dollar: The reasons why it goes down

In a similar vein, he points out Gustavo Quintanafrom PR Operadores de Cambio, when it indicates that “this downward movement responds to a price rearrangement”, but he also explains that it is driven by several reasons:

• on the one hand, many people’s need for meet expenses due to the devaluation,
• On the other hand, the effect of the call mashed potatoes (which is buying MEP cheaper and selling it in the blue to make a profit with the gap).
• and, also, the fact that “is coupled to the levels of the other alternative dollars”says Quintana.

Regarding this last point, Andrés Reschinifrom F2 Soluciones Financieras, points out that “the Cash With Settlement (CCL) It was a bit old (in fact, it exceeded $800 last week) and the start of the soybean dollar 4, which allows the free use of 25% of the export settlements carried out within the framework of that program, this injecting dollars to the square of that stock market exchange rate.”

Thus he maintains that This dynamic may be influencing the CCL price downwards. and, therefore, indicates that, with that exchange rate falling (almost $27 fell in value in the last week) and the dollar MEP around $670, it is understandable that blue also gives ground.

However, the economist Federico Glustein Regarding this last point, he assures “that the decline in the CCL and the blue is due, in part, to the fact that the channeling of foreign exchange demand is going towards the MEP.” He assures that even part of the soybean dollar 4 It goes through that channel.

Likewise, he indicates that this is due, in large part, to the fact that The Central Bank has intervened in the MEP dollar and keeps it cheap. That, Glustein explains, ended up doing go down to CCL. “He subsidized MEP generates a distortion in the market” and Arbitrate the blue and the cable dollar (as the CCL is known).

What’s coming for the informal dollar

On the other hand, Glustein says that it must be taken into account that the August inflation data, which could generate forward overheating. Thus, looking ahead to the coming days, he predicts that “the blue will not be below $700”. For him, that is the floor for him and he expects the MEP to potentially rise closer to $700 by the end of the month.

However, for Quintana, “It is still too early to draw conclusions.”, to see if it is a trend or if it is a specific moment that will pass. “We still have to wait a few days,” she says.