Blue dollar in a nosedive: why the price is falling and what’s coming for the informal exchange rate

He Dolar blue falls $50 Tuesday and trades at $870 for buying and $920 for selling, with a difference of more than almost $300 compared to its all-time high at $1,100. In this way, the illegal exchange rate accumulates a drop of $70 in just two days. And, although it will end the month with a total increase of about $120 (15%), it marks its fourth daily drop in the last seven days. Why is the blue dollar going down and how will it continue going into the runoff?

Increased demand for cash and raids

For Gustavo Quintana, from PR Change Operators“this decline responds, in part, to the fact that a greater need for cash (in pesos), which fuels some supply” and ensures that, in addition, very little is carried out because it indicates that “operations and raids continue”, which significantly reduces activity.

It is worth remembering that just a week ago the illegal dollar rose very quickly and reached $1,100 the day after the presidential elections, in which the ruling party Sergio Massa beat the libertarian Javier Milei. Then, the first announced measures to contain the dollar and maintained the policy of strong controls in the City to discourage the blue market.

Financial dollars and the blue

In that sense, in line with the announcements made by the Government of measures to counteract the rise in financial dollars, Ignacio Zorzoli, Director of Finance of the Argentina XXI Center for Economic Studies (CEEAXXI), provides another condiment that affects the decline in the blue: “the fall that both the MEP and the CCL had in recent weeks.” He points out that this responds to the fact that on the Friday before the elections, people’s need for coverage caused them to buy any instrument in the market regardless of the trading prices.

“This generated an effect of overshooting the exchange rate that, after the results of the elections, the fear of a devaluation of the official dollar (set according to Communication “A” 3500) began to deflate and what we found was a about people’s reaction with the consequent fall,” explains Zorzoli.

An unsustainable gap due to overshooting

Explain what a gap of almost 200% was “more than unsustainable” and that, if the price increase was not validated with a devaluation, the most reasonable thing was to assume that the free dollar would tend to fall. However, he anticipates that, “as we get closer to the runoff date, it is expected that coverage needs will return and the markets will once again be very volatile around the price of the dollar.”

The same points out Jorge Neyroeconomist, when he indicates that “The blue dollar is adjusting to the CCL and the MEPit didn’t make any kind of sense for it to stay above $950.”

What’s coming for the blue dollar

For his part, Quintana hopes that we are going to have several days of tranquility. And he imagines that “the operations in the City are going to continue and activity will be quite reduced, especially until close to the November election.” Therefore, he does not expect a very pronounced acceleration of the blue in the face of the runoff.

The same foresees Joel Lupierieconomist at Epyca Consultores, when he maintains that, “as long as there are no major developments in electoral or regulatory matters, calm is likely to remain“. He hopes that, with the decrease in uncertainty that came after the general elections, it is feasible that the blue will have calmer days than those it had been showing.

However, he warns that, beyond that, a key point begins to be lack of fuel, which seems to be putting pressure on the Government with new price increases, which puts pressure on the official exchange rate and anticipates that, “if there is a forced deprecation in the latter (something that today seems far away), the blue would wake up strong again “. Although, at this moment, it is a possibility that still seems distant.