The blue dollar is in free fall: what will happen and what are the keys for December

One day before the start of December, this Wednesday, the blue dollar fell $20 to $925 and recorded its fifth daily drop in a row, a period in which it accumulated a decrease of $150 in total. This dynamic surprises saversfacing the beginning of a new month, which comes with the inauguration of the new Government, they wonder what will happen to the illegal forward exchange rate.

For him economist from the University of Avellaneda Pablo Ferraria key fact that explains the fall of the last days of the Dolar blue is the fact that, “like financial exchange rates, this exchange rate had an overreaction due to the expectations it generated for some sectors of the economy.” market he President elect”.

Blue dollar: the elements that drive it

In the words of Andrés Reschini, economist at F2 Financial Solutions“from the run-up to the first round, the alternatives showed a behavior of overshoot product of the uncertainty that was generated in the market throughout the electoral process”. And he believes that, today, with the president elected, the market looks more calm.”

A market source points out, on the other hand, that an element that plays in the dynamics of the Dolar blue is that “the market discounts some kind of convergence, whether by a split or by unification”. This brings alternative dollars closer to future ones, according to their vision.

And, on the other hand, he points out that to this is added the fact that the dollar for exporters, which allows them to settle 50% of sales in the official market and the other half in the Cash With Settlement (CCL)which generates supply and lowers the price of the parallels.

Gustavo Quintana, from PR Change Operators, considers that it also “accompanies the trend of alternative dollar markets, influenced today by the entry of exporters, the subscription of LEVID that stimulates the disarmament of other assets.” It all comes together, as he explains.

Likewise, there is the fact that the possibility of dollarization is becoming increasingly distant and this is due to the lack of reserves of the Central Bank, the excess supply of pesos and a country risk that is around 2,000 points. All these elements make it difficult to think about the viability of a dollarization in the short term, according to a report by the consulting firm Ecolatina. And that is reflected in the collapse of the Counted with Settlement (CCL), MEP and blueas well as the contracts of future dollar of the last few days.

The keys to December for the blue dollar

Without a doubt, those elements that marked the blue dollar dynamics in recent weeks they will mostly continue to be present throughout December, although, After December 10, some points of the government plan will be clarified of Javier Milei and that is going to be a factor that will play as well.

Confidence in the next government

“If he manages to overcome the challenges that lie ahead in the immediate future, which are mainly of a social and political nature, and build trust“Alternative exchange rates may not accompany inflation and the rate, as is happening now, but if implementation becomes complicated and nervousness returns, exchange tension will gain momentum again,” warns Reschini. And, in that sense, he anticipates that the trust that Milei manages to generate or not after her assumption will be the key for December.

The possible arrival of dollars

On the other hand, the shortage of dollars in the BCRA It is a central problem for the behavior of the exchange markets and in the City they consider that “the possibility of many dollars entering due to the supposed financing that Luis Caputo would be looking fornew Minister of Economy” is key to what happens in the blue market.

And in relation to the latter, they mention that the statements by Giorgieva, head of the Monetary Fund (IMF), on new financing For Argentina they are also an element to take into account.

The seasonal factor for blue

Finally, Quintana mentions that “December seasonally presents two very different segments:

• the first fortnight, which is demanding pesos to meet bonus payment obligationsvacation advances and holiday expenses, among others, so the price usually drops or stabilizes
• and the second fortnight, which already presents a different panorama, for which reflux of pesosthat the bonus and the bonuses tend to go largely towards the blue dollar, which implies a change in the trend.”

Anyway, of course, This particular December is different. due to the seasoning of the assumption of a new government, so other elements come to play in the keys that will determine what happens with the informal dollar throughout this month.