Yesterday the Central Bank intervened forcefully to lower the implicit price of the dollar in financial markets. But the concern of the economic team, without a doubt, is not only this: Brazil joins.
The acceleration of devaluation of the Brazilian real, which yesterday reached 6.25 reais per dollar can change the order of priorities. To this concern we will have to add another one, because they maintain in the City, to get out of the financial quagmire, President Javier Milei is increasingly enthusiastic – and dependent – on extraordinary help via Donald Trump and the International Monetary Fund, while the Federal Reserve It is thinking about suspending, in 2025, the path of interest rate cuts that it had pre-announced.
First intervention since October: what’s coming
Yesterday the BCRA intervened for the first time since October to stop the financial dollar. As the CCL climbs to $1,190 and the MEP dollar to $1,170 at half-day, The entity led by Santiago Bausili gave the order to the trading desk to fully engage in negotiating AL30 bonds with the purpose of raising the price and generating a lower implicit price in the exchange rate. Thus, the MEP concluded with a decrease of 0.5% to $1,130 and the CCL 1% to $1,144 compared to the close of the previous round.
When consulted, in the City they do not have a uniform position, but they estimate that, if the run continues in Brazil, it is likely that the BCRA will have to continue making some efforts. Of course, yesterday was not just another day.
The United States Federal Reserve (Fed), announced, as the market projected, a new cut in interest rates of 25 basis pointsso the range was 4.25% – 4.50%. However, the data that triggered sharp declines in all markets and the depreciation of emerging currencies was that, for next year, with Donald Trump already in the US presidency, the head of the Federal Reserve, Jerome Powell, anticipated that The organization will be more “prudent” from now on when contemplating new reductions in rates. “With today’s action we have reduced our rate by a full percentage point from its peak and our policy is now significantly less restrictive. Therefore, we may be more cautious when considering further adjustments,” he said.
Powell spoke at the conclusion of the two-day meeting of the Fed’s Federal Open Market Committee (FOMC). The median of the forecasts of the agency’s governors indicated in another report that two more cuts are expected for 2025 reaching 3.9% (equivalent to a range of 3.75% to 4%).
“We are going to look for further progress on inflation, as well as continued strength in the labor market, and as long as the economy and the labor market are strong we can be cautious when considering further cuts,” Powell said.
The world is complicated, Brazil is on fire, and everyone asks Donald Trump
However, while the financial dynamics seem to pose greater challenges to the Government, President Javier Milei stated that he hopes that Donald Trump’s government Help Argentina get a new agreement with the IMF. In an interview with the renowned economic media The Wall Street Journal (WSJ), stated that he hopes that the Republican leader will help the country obtain “billions of dollars” in new financing.
The confidence of the libertarian administration about the role that the IMF will have once the Republican leader takes office is rising every day. This Tuesday, the Minister of Economy, Luis Caputo, affirmed that the negotiations he is maintaining with the Fund and assured that he anticipates that the agreement with the financial entity will be renewed in the first months of next year.
Quietly, what is worrying in the Economy is the Brazilian real. Yesterday plummeted to a historic low of 6.25 units per dollarbringing the annual drop to 22%. Aside from the FED’s definition, which did not help, analysts also maintain that “there is concern about the fragile general fiscal trajectory and the fact that it is affecting inflation expectations through pressure on the real.” For weeks now, distrust seems to have been established in the tax administration in Brazil.
He Brazil’s central bank raised rates to 12.25% last week and promised more increases by March, at a time when other monetary authorities around the world are easing policy. The greatest concern for Argentina comes from the industrial sector, which has been asking for greater competitiveness and conditions for some time, given the Government’s decision to generate economic opening. The fact is that, to the liberalization of imports, we must add the reduction of the PAIS tax (next week the 7.5% that still remained of the tax expires), but also the economic recession, the high costs in dollars in the production. All this is now deepening with the devaluation of the Brazilian real. What will Minister Luis Caputo do?? Will you continue to intervene in the financial dollar market or will you seek to sustain the official devaluation to 2% for some time longer?
Source: Ambito
I am Pierce Boyd, a driven and ambitious professional working in the news industry. I have been writing for 24 Hours Worlds for over five years, specializing in sports section coverage. During my tenure at the publication, I have built an impressive portfolio of articles that has earned me a reputation as an experienced journalist and content creator.
