The blue dollar is calm and the market predicts if it can continue like this until the runoff

This Monday, for Bank Worker’s Day, the blue dollar market did not operate and there was no quote for that illegal exchange rate. However, On Friday it closed at $925, the same price that was marked the previous day. After having jumped up to the $1,100 on Tuesday, October 23After the general elections, the blue fell $175, and even reached $905 in intraday value. With this dynamic, facing the runoff, savers and investors are wondering How will this exchange rate continue towards October 19?. Analysts anticipate this.

He director of CyT Economic Advisors Camilo Tiscornia points out that, “in the run-up to the previous elections there was a lot of fear and that caused the exchange rate to skyrocket” at that time. Thus, he describes a phenomenon of overreaction (known as “overshooting”) in the blue dollar market caused by electoral uncertainty, which led the dollar to set a record intraday value around $1,125.

For him economist from the University of Avellaneda Pablo Ferrari This jump that occurred since the beginning of October responded to the fact that “it was predicted that the presidential candidate who promoted a bank and exchange run could prevail in the first electoral round and that made blue was climbing, even with some very significant jumps”.

Thus, in the words of Noelia Abate, economist at the UBA and master’s degree in Political Economy, This he answered, “First of all, to the election-related speculation “that could not be validated with what happened on the Monday following the vote, since there was no devaluation.” And he explains that, in light of this, once this phenomenon ended, the agents’ expectations had to be adjusted downwards.

Blue dollar: the MEP and the CCL are key

But, on the other hand, he points out that “the intervention of the State was very strong so that, not only did the currency price, but also to lower it.” He comments that the Central Bank (BCRA) operated in liquid dual bonds to contain the price of the MEP dollarthat its price comfortably below $900.

Consequently, starting with the general elections, the informal dollar is registering one of his biggest falls At a historical level, it fell $175, almost 17% in just 10 days. And the market is wondering if it can continue in that trend, which could take it to $900, or even below that value. before the runoff.

This, given that the Dolar blue is arbitrated with MEP and Abate does not rule out the continuation of the downward trend in the second, which could pull the informal downwards as well.

Blue dollar: why it fell

Furthermore, Tiscornia points out that many people already dollarized before the primary and general elections and, now, many are having to sell dollars now because they need pesos. This is added, for him, to the fact that “Massa has a good chance of winning the runoff and, along that path, the Government will redouble all efforts to make the situation as normal as possible.” Thus, he does not rule out that the blue dollar and the other parallels could go down even further in this context.

In the same sense, Juan Alra, Portfolio Manager of Southern Trust, indicates that, “if the scenario of controls and promotion of liquidations of exporters (which can receive 30% of the results of their sales through the Cash With Settlement dollar – CCL), it is likely that stock market dollars will remain stable.” That, as was said, could mark a downward path, or at least pax would change to the blue.

As for that market informal dollarpoints out that, “for now, demand remains stable” and anticipates that, “if this scenario continues, it is likely that it will be sustained” blue dollar pricebut it does not rule out that this could change before some event that happens in the coming days, in view of the runoff.

How the dynamics of the blue dollar will continue

Tiscornia agrees with this vision and anticipates that this calm could be temporarysince he explains that “if there is no fiscal adjustment and the Government continues to issue, sooner or later, contributions will tend to rise, added to the fact that the BCRA’s reserves are at a worrying level.”

Let us remember that last week the BCRA had to pay US$2.6 billion to the International Monetary Fund (IMF) with Special Drawing Rights (SDRs) and yuan and that led to Bookings below US$22,000 million. Added to that is the payment of around US$800 million in interest that he made this Monday, which brought them closer to US$21 billion even.

All this suggests that the decline that occurred in the blue dollarwhich came after the overreaction it had to the electoral uncertainty that marked last October 22 and in an electoral context, calm could be maintained via interventions in the other parallel exchange rates, mostly. However, the strong volatility of this illegal and small market is strong by nature and means that any strong political and economic movement that lies ahead could activate its extreme “sensitivity” to the situation.