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Is the carry trade coming back?: the 5 reasons why the dollar peaked for the market

Is the carry trade coming back?: the 5 reasons why the dollar peaked for the market

The Government suffered a setback with a mini “run” after four and a half months of exchange calm. He Dolar blue It climbed to levels of $1,250, the gap jumped to 40%, a level that the market and the Government itself look askance at. This rise in the exchange rate causedhe market decides to dismantle positions in pesos and dollarizing a part of the portfolio and agriculture stopped the liquidation. ¿But why could that trend be broken this week?

The diagnosis: why the dollar rose

In the market, some analysts attributed the rise in the exchange rate to the sharp reduction in interest rates by the Central Bank. When the market expected at most 500 basis points, the Government ordered cuts of 1000 points to bring the monetary policy rate to 40% nominal annual rate.

In addition, there were fixed-term disarmaments, which is equivalent to more pesos on the street that can go to the dollar. Something that finally stopped the market, happened.

This was added to the lower supply from exporters. “The smallest spread between the rate in pesos and the crawling peg could have begun to discourage the liquidation of exporters,” They warned from PPI this week.

Despite the surprise increase, the current value of the blue dollar is far from the highs of the Milei era. In nominal terms, the record is from January 23, when the parallel dollar closed at $1,255. In real terms, that price quote would equate to a quote of $1,880, according to Econviews estimates.

Finally, a political factor ended up affecting the blue dollar and financiers: the delay in the Bases Law and lack of agreementsdemonstrated that the Government has a clear weakness in its political legs and that it will be difficult for it to approve key laws for changes in the economy.

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How the political factor played in exchange instability

Reuters

Why the blue dollar might not continue rising

According to Consultatio’s analysis, as long as the Government’s idea of ​​fiscal commitment and progress in reducing macro imbalances does not change, there will not be a change in trend in the dollar.

“The rise in the exchange rate has a ceiling,” he stated. “Regardless of the volatility it may have, we rule out a spiralization of the gap. The risk of a greater rise is fundamentally political“he concluded.

Meanwhile, from the consulting firm FyMA, when the instability stopped in the last two days of last week, the dollar blend with a better exchange rate it could once again encourage exporters to liquidate.

Another factor that points out is that the disarmament of positions in pesos This week, the yield of Lecaps increased, which is around 44% TNA at three months (3.6% TEM). “This rise in the yields of bills in pesos can be an attraction for the market to “re-enter” positions in assets in pesos. In addition, in the next debt tenders, the government can once again offer bills with minimum rates higher than those in force in the secondary market to capture the interest of investors,” he explained. At the same time, he noted that there may be dismantling positions in dollars to go towards CER instruments.

Finally, in line with Consultatio, he maintained that if the Base Law advances this week, the impact on the market would be positive and exchange rate calm would return.

Source: Ambito

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