Starts July And with this new month the market begins to analyze what may come for the different variables that impact the economy. One of them is the dynamics of the blue dollar, which at the end of June reached its record nominal value, touching $1,335 for purchase and $1,365 for sale. The exchange rate informal climbed by $140 (+11.4%) in the last 30 days and had already risen $185 (+17.8%) in May, after three months with slight oscillations. Will the trend continue in the next 31 days? What elements will set your pulse?
Several elements marked the trajectory of the blue dollar in June. An essential one was the payment of the half bonus, which is usually a key seasonal variable for this market, another, the debate on the Bases law, which was finally approved in the House of Representatives, and also the difficulty of the Central Bank (BCRA) in accumulating reserves at a time of the year when the heavy harvest is usually a guarantee of dollar accumulation for the monetary regulator.
It was good news that it came to a Agreement with China regarding the freely available portion of the “swap” for the equivalent of US$5 billion. But it ended the sixth month of the year with sales of US$84 million and the market is pushing for an acceleration of the “crawling peg”, despite the fact that the Government time and again ruled out a devaluation and ratified the “blend” dollar for exporters.
The accumulation of reserves by the BCRA is key for the blue dollar
Thus, for the economist Pablo Ferrari“the trajectory of the Dolar blue It will depend, mainly, on how the accumulation of dollars of the BCRA in July.” And he points out that this is closely related to economic activity.
“We saw that, in the first quarter of the year, imports dropped a lot and that implies recession. Therefore, I believe that, by continuing the International Monetary Fund (IMF) roadmap, “What is being done is generating more restraint on activity. Therefore, unless the organization decides to disburse more dollars before September, it will be difficult for the Government to loosen this restriction. It can graduate it with the inflow of foreign currency from money laundering, but it needs fresh funds to come in at some point,” he says.
Another determining element, the rate
For his part, the economist Joel Lupieri, from Epyca Consultantspoints out that “the interaction between the interest rate and inflation expectation future that is generating the rise of the MEP dollar”. This exchange rate, like the Contado Con Liquidación (CCL) are arbitrated with the informal rate and that makes the rate an element that appears to be predominant going forward.
“Blue is taking on its own dynamic as a result of the drop in rates in the last quarter and that is not having a containment dam on the part of the Government,” according to Lupieri. And the policy of negative real rates was maintained throughout last month. Let us remember that The BCRA lowered the monetary policy index sharply between December and May (the one of passes) and took it from 133% to 40% nominal annual in that period. That is equivalent to a effective monthly yield of 3.3%.
With the interest paid on the deregulated fixed termbanks are paying around 3% a month in some cases, which made Many savers decided to get out of income in pesos and migrated towards the dollar. This is how a small exchange rate run was experienced in May and The blue interrupted his calm prior to starting an upward trend in May and June.
The Government assured that this stage of negative rates has come to an end (a 3.3% monthly effective return against an inflation of 4.2% in May). And for him economist and director of MyR Consultores, Fabio Rodríguez“It is essential that fixed-term deposit rates rise” to contain the exchange rate dynamics, “even more so given that inflation for July will be known, which is expected to be around 5.5%.”
The Minister of Economy, Luis Caputo, is trying to establish the yield of Treasury debt instruments as a reference rate, which would align this parameter more with inflation given that, today, Capitalization Letters (LECAP) yield around 4.3% monthlyThis is taking place in a context in which he, together with Santiago Bausili, launched a new stage in the stabilization plan of the Economic team.
It was announced that the BCRA will stop issuing money to finance its paid liabilitiesfor this, They will replace these instruments with others from the Treasury and the Treasury will pay the interest. Thus, they assured that the Central Bank will continue to manage monetary policy, but it no longer suffers the consequence of the movement in the interest rate resulting in higher monetary emission.
The success of Caputo’s new plan will have an impact on the blue dollar
And to Andrés Reschini, analyst at F2 Soluciones Financierasthis will be an important element for the blue dollar: “The fact that that BCRA manages to regain control of the rate without the need to issue can help calm“, he points out. He highlights, in this sense, that, now, he will have one more tool to control the exchange rate dynamics, but warns that We have to see if everything else is in line“. Thus, he believes that the market will be attentive to the fiscal result (key for the Treasury to guarantee the support of the new debt instruments), the accumulation of reserves and inflation expectations.
Deregulation and international rates
On the other hand, Reschini believes that the upcoming deregulation reforms will also be important, and, “on the external level, as I have been pointing out for some time, the Brazilian real, agricultural commodity prices and the decisions of the United States Federal Reserve (Fed), on rates.
Blue dollar: what’s coming in July
It turns out that, as stated Gustavo Quintana, from PR Exchange Operators, July is “a month with a still uncertain forecast” in which the regulations of the Bases law will surely impact. Thus, for him, “in the first fortnight of the month we will see a panorama not very different from that at the end of June for the blue dollar.”
And, towards the end of the month, it will be decided whether the implementation of the announcements made by the Government, added to the Evolution of the implementation of the Bases Law and the purchase of BCRA reserves calm expectations. “If so, it is likely that we will see greater calm with prices anchored at levels similar to the current ones,” she anticipates.
Source: Ambito
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