Blue dollar on the floor: the reasons why it falls and what to expect going forward

The blue dollar has been declining for six weeks, now accumulates a drop of $225 (-18.4%) in that period and is located at $965 for purchase and $995 for sale. This is a movement that surprises savers and analysts given that the parallel market is usually bullish in Argentina and that is contrary to all variableswith inflation that reached 25.5% in December, 20.6% in January and could be 15% or 17% in February.

He economist at the Center for Economic and Social Studies Scalabrini Ortiz, Federico Zirulnikpoints to Ambit that “much of this trend in the Dolar blue It has to do with the supply that exporters generate by being able to settle 20% at the Cash With Settlement (CCL) value.”

The dynamics of the export dollar, a key

And, as pointed out the economist Pedro Gaite“in terms of financial dollars, which are the most important in macroeconomic terms, due to the volume of the market and the expectations that move them, the export regime is playing that settle a part in the cable dollar.”

What happens is that, due to the market volumes handled by the Cash With Settlement (CCL), the amount of exports that are channeled through that market brings down the price of that market. That drags down the MEP dollar and also the blue.

Less pesos to buy blue dollars, another key element

But Gaite explains that This resounding fall of the blue responds to several things and not only to the dynamics of the financiers, although it is a key factor. “On the other hand, there may be an effect of people who bought dollars at the end of the month and who today are having to sell them to be able to cover their expenses,” he adds as another element.

In line with these two points, Ignacio Zorzoli, Director of Finance of the Argentina XXI Center for Economic Studies (CEEAXXI), notes that “the movement of Dolar blue It must be understood in relation to the movement of the exchange rate in the stock market and the monetary politics that the Government is carrying out.”

He explains that the path outlined by the new administration marks the search for a sharp decrease in inflation with the correlation of a highly restrictive monetary policy. The conclusion of this is that “there are no pesos held by the retail public to generate pressure on the exchange rate.”

Market support helps calm the blue dollar

But, on the other hand, for Gaite, the fact that a large part of the market has a reading that the economic direction is on track“because there is a good look at the accumulation of reservesthe fiscal surplus, the monetary base, remunerated liabilities and the trend of deposits.

While he doubts that these elements are sustainable in the long term, what is certain is that the square is quite optimistic and that plays on expectations regarding exchange rates.

What’s next for the blue dollar: is the decline continuing?

Thus, looking ahead, Zorzoli indicates that, during March, the agricultural complex will begin to liquidate the corn and in April the thick harvest soybeans. An entry of between US$25,000 million and US$30,000 million is estimated. And, although part of this amount will be demanded by importers as the economy recovers, “it will undoubtedly lead to a accumulation of reserves by the Central Bank (BCRA)”.

That is an element that helps take pressure off parallel exchange rates because the market perceives that the BCRA It has firepower. However, according to Zirulnik, there is not much room for the price of the financiers and, therefore, of the blue to continue to decline, given that “the gap is approximately 15% with the wholesaler and, if the tax is added COUNTRY, they are already almost at the same level as the importing dollar.”

Therefore, Zorzoli points out that “It is to be expected that in the short term the price of the dollar will remain in these values ​​without strong devaluation jumps, as long as the policy does not change course.”