Blue dollar: why it rebounded strongly, despite government measures to reduce the gap

Following the new monetary/exchange rate strategy announced by the Government, The blue dollar started the week replicating the collapse of the financial markets, but this Wednesday it rebounded strongly and approached her again nominal record. The specialists who spoke with Ambit They stressed to the Low credibility of the plan as one of the main factors that caused the share price to rise.

Dollar: Government launched a new strategy to reduce the gap

Last Friday the blue dollar closed at $1,500a value that had never been reached until then. In this way, the gap with the official exchange rate climbed to 62.8%the highest value since the devaluation implemented by the Government of Javier Milei a few days after taking office.

In this context, and in the face of the escalation of financial crises, the economic team headed by Luis Caputo announced over the weekend that The Central Bank (BCRA) will begin to intervene in the stock market with two fundamental objectives: 1) Absorb the equivalent of pesos which it issued to buy foreign currency in the official market and 2) Step on the price of the CCL in order to bridging the gap.

According to the Ministry of Economy, The equivalent of $2.5 billion will be sold at the CCL that the monetary authority issued every time it received foreign currency from exports or other reasons. At current prices, this This would imply an outflow of reserves of approximately US$1.92 billion.

The flip side of this action is that the Government put the objective of accumulating reserves on the back burnerrequested by the International Monetary Fund (IMF) in view of the signing of a new agreement and necessary to facilitate the exit from the cepo.

“Monetary calm is being prioritized “in order to avoid imbalances that translate into future inflation. The accumulation of reserves could occur but very slowly, this to the extent that the gap is reduced, which at this moment is a priority for the Government, as well as inflation,” he explained to this media. Pity OrtizChief Economist at Wise Capital.

Nicholas Cappellafrom Investing in the Stock Market (IEB), said that This Wednesday, a greater intervention by the monetary authority was verified but “without attacking the exchange rate,” something that according to the specialist “makes sense since If the idea is to absorb pesos, trying to do so at a higher and more homogeneous exchange rate is better than constantly pulling it down.”

In parallel, the BCRA is offering banks and financial institutions between Wednesday and Thursday the Possibility of repurchasing put transactions (a kind of insurance against the fall of bonds) with the idea of ​​reducing the potential risk of an issue of approximately $17 billion (equivalent to US$18.41 billion).

Regarding the latter, the economist Federico Glustein He said that while the offer is good, “The rules scheme plus short-term pressure may play against the banks’ decision to support the government in sterilization”.

Why did the blue dollar stop falling?

The immediate impact of the measures on the exchange markets was positive: the MEP and CCL plummeted by around $140 (approximately 10%) in the first two business days of the week, while the price of the blue one fell by $95 (-6.3%).

However, the “pax” did not last longsince this Wednesday the prices rebounded upwards: in particular He highlighted the rise of the blue, which went from $1,405 to $1,455 on Wednesday (with an intraday high of $1,470) and returned to approach its nominal historical maximum.

“Parallel exchange rates initially fell more due to expectations of intervention than due to actual official intervention. Uncertainty about the monetary outlook caused the dollar to rebound in all its measurements,” Ortiz explained.

For the specialist, another element that explains the rebound “is the Transfer of savings to the dollar, which in times of uncertainty and with high expectations of future devaluation gains some strength“.

For his part, the economist Federico Glustein He concluded that the official strategy “is sustainable in the short term,” but noted that it is necessary greater strength to ensure that the plan is credible and that the dollar remains calm.