Future dollar: what a key indicator that serves to measure market devaluation expectations says

Future dollar: what a key indicator that serves to measure market devaluation expectations says
Future dollar: what a key indicator that serves to measure market devaluation expectations says

Private agents expect an official devaluation that will be a third of the projected inflation. (REUTERS/Agustin Marcarian/Illustration/File Photo)

The heavy harvest season began and the exchange market registered a growth in business volume, which reflects that more foreign currency is entering the economy. Although it is a temporary “rain of dollars”, since starting in winter, this trend allows the Government to accumulate reserves in the Central Bank and sustain the gradual pace of devaluation Of weight.

In this aspect, there is a indicator to follow and that serves to mark devaluation expectations between the market actors, which is that of the operations of future dollaror in Matba-Rofex and MAE (Electronic Open Market). These businesses between private parties that agree on contracts in pesos tied to the evolution of the official exchange rate establish an expected path for the dollar in the next twelve months.

According to the prices traded this Tuesday, contracts with maturities of End of the month They reached 1 p.m. 878.50 pesos. Given that the wholesale dollar began April at $858, the expected increase for the month is 2.4%, very close to the 2% rate of the crawling peg or gradual devaluation ordered by the Central Bank starting on Wednesday, December 13, after the exchange rate jump that took the dollar to 800 pesos.

For May the contracts reach $911.50with a rise of 3.8% monthly, which higher than the 2% official devaluation rate, is a rate lower than the expected inflation, of 9% according to the latest REM (Market Expectation Survey) of the BCRA.

For the closing of December future dollar contracts are being fixed at 1,277 pesos. This implies an exchange rate jump expected by those deprived of the order of 58% annually (from $808.45 at the end of 2023), practically a third of the inflation projected by consulting firms of 189.4%according to the REM of the BCRA.

“In relation to the exporting dollar, a look at the Real Exchange Rate shows a continuity in real appreciation – recent pressure on the Brazilian real would lead, if it persists, to an even more accelerated pace of appreciation -, but with dollar futures far from to suggest any type of discrete jump in the official dollar (BCRA Communication A3500) for the moment. In that sense, the words of the Minister of Economy Luis Caputo At an event with investors in Washington they pointed out, we understand, that exchange controls would continue at least for a while longer.” the experts from SBS Research.

“A look at the curves forward from CER also suggests that: we remember that what supports the bond curves in pesos today are the exchange controls and that, at the end of these, a positive real rate in pesos is to be expected, unlike the current situation. Continuing with Caputo’s statements, he ratified the Government’s fiscal commitment, in a week in which the ruling party sent its draft Fiscal Package to deputies,” the report added.

For the analyst Salvador Di Stefano, “the Government is ratifying the direction of an economic program that has an anchor in fiscal policy, non-issuance of currency without support and systematic lowering of the interest rate. The exchange rate is not a variable to modify, the improvement in competitiveness will come from the deregulation of the markets, more low-rate financing, and at some point lower taxes.” And he argued that “to the extent that we have a fiscal surplus and there is no unsupported monetary issue, public debt reaches very high levels, which allows an improvement in the prices of public securities, a reduction in country risk, and an improvement in the Bank’s balance sheet. Central, and we are close to a probable opening of international markets for an improvement in our financing.”

“I do not believe that the Government will carry out a devaluation of the peso, that would throw away all the progress in the fight against inflation. I believe that this government is ready to lower the tax rate when it has room for maneuver,” Di Stefano stressed.

On the other hand, there is a activity contraction factor economy that ends up being an ally of exchange rate stabilization, as it results in a lower demand for foreign currency for imports which, at the same time, reinforces the trade surplus, which reached 2,056 million dollars in March, with a 37% year-on-year drop in purchases of goods abroad.

Private parties project a 58% rise in the official dollar by 2024, against an inflation of 189%: this results in a real fall in the dollar of 45%

“The improvement in the commercial result in March was due to a sharp drop in imported values, which totaled USD 4,335 million and decreased by 36.7% versus the same month of 2023. For their part, exports totaled USD 6,394 million , increasing in value by 11.5% annually in March, after an increase of 9.6% in January and 5.6% in February,” the consulting firm stated. Abeceb.

“The trade surplus in March was known, with a sharp drop in imports that shows the weakness in activity. We estimate that Argentina’s trade balance will be in surplus in 2024, although we once again repeat that the removal of exchange controls is essential to think about both a normalization of external accounts and a sustained economic recovery,” they stated from SBS Research.

 
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