In the last round of the week, the Dolar blue ended this Friday with a drop of five pesos to $1,225 in the caves of downtown Buenos Aires. In the stock market segment, the dollar counted with settlement was traded at $1,246 and the MEP was offered in $115.
In an economic context where forex market volatility has been – in recent years – the norm, market sources surveyed by iProfesional shed a light of stability on Argentina’s financial horizon. With fiscal management that exceeded expectations and a Central Bank of the Argentine Republic (BCRA) that has been cleaning up its balance sheetsexperts suggest we have reached a tipping point.
For analysts, the current government’s campaign promise not only remained intact, but was strengthened with tangible results: a 35% reduction in the BCRA’s remunerated liabilities and growth in gross reserves of $6.5 billion. These achievements, together with effective control of inflation and an economic strategy oriented towards exchange rate unification, have created a scenario where the value of the free dollar seems to have found its limit.
Experts point to a decrease in the gap between the official dollar and the parallels as a direct result of the Central Bank’s policies. The “exchange pax” that has prevailed since February could be coming to an end, but not abruptly or chaotically, but rather as a transition towards a more open and competitive currency market.
The perspective of exchange rate unification a more accessible financial dollar in real terms opens the door to new investment strategies and a flow of foreign capital that until now has been limited. Even some analysts recommend selling positions in dollars and adopt a “carry trade” strategywhich reflects confidence in the medium term where instruments in pesos could offer an extremely attractive risk-return relationship.
Dollars have already hit their ceiling
“The rise in financial dollars last week is not linked to a typical bank run, but rather to a rearrangement of the price, which had been postponed in the face of inflation during 2024. Despite this, it is inevitable that any increase in the exchange gap will generate requests for an increase in the Crawling Peg rate,” says economist Joaquin Marque, director of UG Valores.
And he adds: “Any increase in the exchange gap will have a correlation in inflationwhich will postpone the losses projected for June and July”.
For experts, exchange rates will find a ceiling
Furthermore, he assures that “the accelerated decline in interest rates was the main factor in the rise in financial dollars, followed by the political uncertainty generated by the obstacles to the approval of laws promoted by the executive.”
According to the Invest in the Stock Market Group, The Government continues to present good results on the fiscal side, fulfilling his campaign promise to the letter. And they specified that, for the exit from the stocks, the sanitation of the BCRA is a necessary condition, and the monetary authority has been responding to this condition with a reduction in the real stock of its liabilities and accumulation of reserves at an unprecedented rate (even with a type of change that many consider overdue).
“Today remunerated liabilities have accumulated a drop of 35% in real terms (explained by the liquefaction and disarmament of passive repos), the monetary base also contracted in real terms, and gross reserves grew by US$6.5 billion, still supporting purchases in the exchange market,” the Group noted. Invest in the Stock Market.
At the same time, they highlighted as additional factors the fact that the Government has been successful in controlling inflation, consistently presenting data on this index in decline, and we also highlight the needs for pesos as we approach the end of the month. .
For this reason, they concluded that exchange rates will find a ceilingand there will not be a surge like those recorded last year in times of high political and economic instability, but rather the current situation is better described as a correction after several months of tranquility, perhaps excessive.
Can the dollar go down?
According to Juan Pedro Mazza, Fixed Income Strategist at Cohen, The Central Bank’s repeated rate cuts finally moved to the gap between the official dollar and the parallelsending the “pax exchange rate” that had been in place since February.
According to the government itself, the current economic scheme aims to achieve exchange rate unification as soon as possible. The lifting of the stocks is a necessary condition for foreign investments to appear; there will be no capital entry as long as their exit remains prohibited.
With this in mind, Mazza points out that the government confirmed that Argentina is heading towards a free currency competition scheme and that it will lift the stocks as soon as it has finished cleaning up the BCRA’s balance sheet through the accumulation of reserves and the elimination of remunerated liabilities.
The repeated reductions in rates were transferred to the gap between the official dollar and parallels, ending the “exchange pax”
“From our perspective, it is most likely that this exchange rate unification will occur at a financial dollar that is cheaper than the current one in real terms. That is, we believe that financial dollars will lose ground against inflation in the remainder of 2024. This is due partly to the strong fiscal anchor, which rules out the need to financially finance the Treasury,” he indicated.
For this reason, the expert suggests sell positions in dollars and “resume a carry trade strategy”given the prospects for exchange rate unification under a scheme where the supply of pesos will be contained, pointed out that instruments in pesos offer an attractive medium-term risk-return relationship at their current prices.
Is there an exchange delay?
According to a report from the Grupo Invertir en Bolsa broker, The accumulated inflation between December and April was 107%, while the official exchange rate moved at a devaluation rate of 2% monthly, then accumulating a real appreciation close to 45% since the devaluation that took the exchange rate to $800; Therefore, at today’s prices, said exchange rate level would be equivalent to $1,580.
“This appreciation then begins to raise questions about whether the current level of the exchange rate is competitive, and if it could hit the liquidation of exporters and make it difficult to accumulate reserves. the idea of an acceleration of crawling peg gaining strength to respond to said delay,” they stated.
For the brokerage company, the government has a very clear position regarding this issue, defending the current level of the exchange rate with the Minister of Economy confirming that “the appreciation is here to stay”, and the President ensuring that “the only way to gain competitiveness is with structural reforms” (making clear reference to the DNU and the Bases Law).
“Just as it is practically impossible to determine whether the current level of the exchange rate is appreciated with respect to its equilibrium level simply by observing historical values. In this way, a devaluation or acceleration of the crawling peg would be practically ruled out in the current scenario,” they stated.
On the other hand, they warned about the delay in the liquidation of exporters, with a great impact on the CCL supply due to the “blend” dollar. At such low levels of the financial exchange rate, they warned that this incentive begins to be lost, delaying the settlement and putting upward pressure on the North American currency by not counting on the supply from agriculture.
How much is the blue dollar trading at today?
The blue dollar stood at $1,225 for sale and $1,195 for purchase.
How financial dollars operate
In the stock market segment, the dollar counted with settlement was traded at $1,246 and the MEP was offered at $1,215.
What is the price of the official dollar
The price of the retail dollar of Banco Nación ended at $914.
The wholesale dollar was traded at an average of $895.50.
For its part, the solidarity dollar and card dollar are located in $1,462.40.
The exchange gap
Finally, the exchange gap between the wholesale dollar and the different exchange rates is as follows:
• Blue: 37%
• CCL: 39%
• MEP: 36%
