The inflation data put extra pressure on the exchange rate. Future dollar contracts continue to rise.
Although the market now accepts that the exchange rate restriction will continue for a long time, The recent inflation data for August, higher than expected, puts pressure on dollar futures throughout the entire curve. Thus, the December contract is now at $1,099.
In this way, The market expects a certain acceleration in the exchange ratesince the contracts have a rate higher than 2% per month, and are located around 3.5% averagewhich is why experts argue that Coverage remains relatively expensive in the absence of a small exchange rate jump or an acceleration of daily micro-devaluations.
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“With regard to exchange rate coverage, there are increasing signs that The lifting of the currency controls and the exchange rate delay will extend well into 2025. The Central Bank will try to maintain the current ‘crawling’ prioritizing the deceleration of inflation,” they explained from Investing in the Stock Market (IEB).
For its part, from Aurum analyzed: “Futures market returns to late August price levels. The exceptions are only concentrated in the very short term, with the September and October contracts trading lower (on Thursday), consolidating the low crawl round after round. However, “Exchange rate uncertainty drives demand across the rest of the curve, with an average monthly devaluation rate of 3.7%.”
On this day, Shorter contracts also risealthough in smaller proportion, October thus advances 0.2% to $1,017, while November is at $1,055and In December it reaches $1,098.50. For February 2025 will be at $1,181 and in April it will be at $1,264.
Dollar: the uncertain future of the exchange rate cap and inflation pressures
Inflation in August accelerated compared to the previous month and failed to break through the much-desired 4% mark: it stood at 4.2%, and the cumulative figure for the year was close to 95%according to the National Institute of Statistics and Census of the Argentine Republic (INDEC) published this Wednesday. The figure exceeded the forecasts of the Market Expectations Survey (REM) published by the Central Bank, of 3.9%.
Following the release of the inflation data, dollar futures contracts rose by up to 1%. This is how they explained it from Outlier: “The dollar futures curve had increases of more than 1% in the middle part of the curve and more than 444,000 contracts traded. In this market it seems too be adjusting the rate, on the one hand, or incorporating a greater chance of an adjustment exchange rate. It seems that the inflation data could put pressure on the government to hold back the rise in the exchange rate to anchor prices even further.
This movement also had its impact on cautionthat returned to levels not seen since the end of April, around 39%, with operations reaching a maximum of 60% TNA.
Source: Ambito
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